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Your company is financed 30% with riskless debt with a yield of 6% and 70% with equity with a cost of 14%. The corporate tax
Your company is financed 30% with riskless debt with a yield of 6% and 70% with equity with a cost of 14%. The corporate tax rate is 25%.
a. What is the company's WACC at its existing capital structure?(5 points)
b. What would be the new WACC if it changes to being 40% debt financed?
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