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A firm maintains a debt equity ratio of 10 The debt consists of bonds with a before tax cost of 9 The equity consists of common stock with a cost of 18 The marginal corporate tax rate is 40

A firm maintains a debt/equity ratio of 1.0. The debt consists of bonds with a before tax cost of 9%. The equity consists of common stock with a cost of 18%. The marginal corporate tax rate is 40%. What is the weighted average cost of capital?
A. 8.1%        C. 10.8%
B. 9.9%        D. 11.7% 

Jun 20 2021 View more View Less

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