A company is 36 financed by risk-free debt the interest


A company is 36% financed by risk-free debt. The interest rate is 9%, the expected market risk premium is 7%, and the beta of the company’s common stock is 0.63.

a. What is the company cost of capital?

b. What is the after-tax WACC, assuming that the company pays tax at a 34% rate?

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Financial Management: A company is 36 financed by risk-free debt the interest
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