What would be the weighted average cost of capital

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Reference no: EM13927810

What would be the weighted average cost of capital for Limp Linguini Noodle Makers, Inc. under the following conditions?

*The capital structure is 40% debt and 60% equity

*The before-tax cost of debt (which includes flotation costs) is 20% and the firm is in the 40% tax bracket.

*The firm’s beta is 1.7

*The risk-free rate is 7% and the market risk premium is 6%

Show calculation and work.

Reference no: EM13927810

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