Multiple Choice
A firm has a capital structure with $75 million in equity and $45 million of debt. The cost of equity capital is 10% and the pretax cost of debt is 7%. If the marginal tax rate of the firm is 40%, compute the weighted average cost of capital of the firm.
A) 6.7%
B) 7.0%
C) 7.8%
D) 8.6%
Correct Answer:
Verified
Correct Answer:
Verified
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