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You have the following information about a firm and the market The firm s beta is 1 . 3 Market value of the firm s

You have the following information about a firm and the market
The firms beta is 1.3
Market value of the firms equity is $100m and market value of its debt is $300m
The firms cost of debt is 8%
Corporate tax rate is 21%
The expected market return is 10% and the risk-free rate is 2%
What is the firms weighted average cost of capital (WACC)? Estimate its cost of equity using the CAPM model.
A.
0.0751
B.
0.0983
C.
0.0784
D.
0.0654

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