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You would like to estimate the weighted average cost of capital for a new airline business. Based on its industry assetbeta, you have already estimated
You would like to estimate the weighted average cost of capital for a new airline business. Based on its industry assetbeta, you have already estimated an unlevered cost of capital for the firm of 9%.
However, the new business will be 29%
debtfinanced, and you anticipate its debt cost of capital will be 6%.
If its corporate tax rate is 33%,
what is your estimate of itsWACC?
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