Determine what is the firms cost of capital before taxes

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Reference no: EM13313979

A firm's stockholders expect a 15% rate of return, and there is a $12M in common stock and retained earnings. The firm has $5M in loans at an average rate of 7%. The firm has raised $8M by selling bonds at an average rate of 6%. What is the firm's cost of capital:
(a) Before taxes?
(b) After taxes with a tax rate of 35%?

Reference no: EM13313979

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