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What cost of capital for otherwise identical all-equity firm

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Acetate, Inc. has equity with a market value of $23 million and debt with a market value of $7 million. Treasury bills that mature in one year yield 5 percent per year, and the expected return on the market portfolio is 12 percent. The beta of Acetate's equity is 1.15. The firm pays no taxes.

Problem 1: What is the cost of capital for an otherwise identical all-equity firm?

Reference no: EM132777281

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