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Calculate the cost of equity

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Question - The company "Gaucho Services" began to operate only with financing from its owners (all equity financing) and has a cost of equity of 14%, suppose they decide to refinance with the following capital structure at market values ??(market value capital structure):

Debt (D) 45% rd = 9.5%

Equity (E) 55%

Calculate the cost of equity considering that the tax (the marginal tax rate) is 40%, and calculate the weighted average cost of capital.

Reference no: EM133000790

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