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The M&M Company Is Financed by $10 Million in Debt

Question 51

Multiple Choice

The M&M Company is financed by $10 million in debt (market value) and $40 million in equity (market value) .The cost of debt is 10% and the cost of equity is 20%.Calculate the weighted average cost of capital assuming no taxes.


A) 18%
B) 20%
C) 10%
D) 12%

Correct Answer:

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