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What is penny blossom wacc

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Reference no: EM132793897

Penny Blossoms has a target capital structure of 40% debt and 60% equity. Its cost of equity is 1%, cost of debt is 5%, and its tax rate is 25%.

Question 1: What is Penny Blossom's WACC?

Question 2: What would happen to the WACC if it changed its capital structure to 50%/50% (no math just theory, explain your answer)?

Reference no: EM132793897

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