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International Exchange has three divisions: A, B, and C.Division A has the least risk and

International Exchange has three divisions: A, B, and C.Division A has the least risk and Division C has the most risk. Thefirm has an aftertax cost of debt of 6.1 percent and a cost ofequity of 14.3 percent. The firm is financed with 35 percent debtand 65 percent equity. Division A's projects are assigned adiscount rate that is 3 percent less than the firm's weightedaverage cost of capital. What is the discount rate applicable toDivision A?

7.98 percent

8.27 percent

8.44 percent

9.48 percent

13.43 percent

Dec 04 2019 View more View Less

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