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Bluegrass Mint Company has a debt-equity ratio of 0.43. The required return on the company's unlevered equity is 13.5% and the pretax cost of the firm's debt is 6.8%. Sales revenue for the company is expected to remain stable indefinitely at last year's level of $18,162,998.2. Variable costs amount to 55% of sales. The tax rate is 23% and the company distributes all its earnings as dividends at the end of each year.
What would be the value of debt?
HINT: Use the WACC to compute the value of the company and then determine the amount of debt
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