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You are given the following information about a firm and the equity-debt structure of this firm: i) The amount of long-term outstanding debt is 150,000.
You are given the following information about a firm and the equity-debt structure of this firm:
i) The amount of long-term outstanding debt is 150,000.
ii) The debt is risk-free and is financed at an interest rate of 7%.
iii) Number of shares of common stock is 40,000.
iv) The price per share is 15.
v) The stock's beta is 1.2.
vi) The expected market return is 14%.
Calculate the firm's before-tax cost of capital
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