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What is the firm cost of capital

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Question - A firm that's subject to a 40 percent tax rate has a debt of $60M, equity of $140M, and no preferred stock. What is the firm's cost of capital (WACC) if its pretax cost of new debt is 12 percent, the pretax cost of its old debt is 8%, and its cost of equity is 14.5 percent?

a. 13.75%

b. 11.59%

c. 12.31%

d. None of the above

Reference no: EM133062209

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