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What is firm marginal cost of capital at a total investment

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Question - ABC LTD has determined that its after-tax cost of debt is 9.0%. Its cost of preferred stock is 15.0%. Its cost of internal equity is 17.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has Tshs 378 million of debt, Tshs 63 million of preferred stock, and Tshs 459 million of common equity.

The firm's marginal tax rate is 45%. The firm is currently making projections for next period. Its managers have determined that the firm should have Tshs 92 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of Tshs 247 million?

Reference no: EM132614757

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