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What would be the firm levered cost of capital

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Reference no: EM132913865

Problem 1: An unlevered firm has a cost of capital of 12.46 percent and a tax rate of 35 percent. The firm is considering a new capital structure with 35 percent debt. The interest rate on the debt would be 6.68 percent. What would be the firm's levered cost of capital?

Option 1: 3.90%
Option 2: 14.27%
Option 3: 14.78%
Option 4: 13.94%
Option 5: 14.48%

Reference no: EM132913865

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