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Your company is financed 30% with debt and 70% with equity. The internal rate of return on the company's debt is 7%, the equity has
Your company is financed 30% with debt and 70% with equity. The internal rate of return on the company's debt is 7%, the equity has a beta of 1.5. The risk-free rate of return is 5% and the market risk premium is 6%. The corporate tax rate is 40%.
a. What is the company's cost of capital or unlevered cost of equity?
b. What is the company's weighted average cost of capital (WACC)?
Please show all the work (no excel) and I will upvote your answer. Thank you
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