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Divided Walls Construction (DWC) has determined that the yield to maturity (YTM) on new bonds is 5 percent, and its cost of common stock is 11 percent. If DWC's capital structure consists of 40 percent debt and 60 percent common equity, what is its weighted average cost of capital (WACC) if it (a) does not have to issue new stock to raise additional funds and (b) must issue new stock to raise additional fund? DWC's tax rate is 35 percent.

Reference no: EM132171818

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