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What is the weighted average pre-tax cost

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A company has a market value of $500 million. It has a market value of equity of $200 million, a market value of long-term debt of $150 million, an a market value of short term debt of $150 million.

The cost of equity is 12%, the cost of long-term debt is 8%, and the cost of short-term debt is 6%. The marginal tax rate is 35%.

What is the weighted average pre-tax cost of capital for the company?

Reference no: EM132466672

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