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Calculate after tax cost of financing

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Reference no: EM133122957

Question - Owners of a small business want to expand. They intend to borrow the following:

Share capital Mortgage $400.000

Other Payables line of credit $300,000 $50,000 $80,000

The owner would receive 6% if they invest in investment securities. The after tax cost of capital for the line of credit is 7% and for the mortgage 6%. Calculate after tax cost of financing and after-tax weighted cost of capital.

Reference no: EM133122957

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