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Consider the following information of Company A. 1. The pre-tax cost of debt of Company A is 12% 2. Company A is a constant dividend growth firm that just paid a dividend of $2 per ordinary share and has a dividend growth rate of 8% 3. The current market price of Company A is $27 per share 4. Company A has a target capital structure of 40% debt and 60% equity 5. The company's tax rate is 30%
Required:
a) What is the after-tax cost of debt?
b) What is the WACC under an imputation tax system
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