Return on equity is estimated

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Reference no: EM131810909

An engineering firm has borrowed $725,000 at 7%. The stockholders have invested another $600,000. The firm's retained earnings total $1.2M. The return on equity is estimated to be 11%. What is the firm's cost of capital:

(a) Before taxes?

(b) After taxes with a tax rate of 40%?

Reference no: EM131810909

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