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Compute the cost of capital of this company

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Question - The after-tax cost of debt of Company XYZ Ltd is 4.5%. the systematic risk of its equity is equal to that of the market. The risk-free interest rate is 5% per annum. Rate of return on market portfolio is 7% (assume franking premium = 0). 35% of the firm's funding comes from debt and the rest comes from equity. Compute the cost of capital of this company.

Reference no: EM133170024

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