What will be the companys weighted-average cost

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Reference no: EM133327468

Case: SolBridge Inc. is all-equity-financed. The expected rate of return on the company's shares is 10%.

Suppose the company issues debt, repurchases shares, and moves to a debt-to-equity ratio of 4 (D/E=4).

Question: What will be the company's weighted-average cost of capital at the new capital structure? The borrowing rate is 8% and the tax rate is 50%.

Reference no: EM133327468

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