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If Portland has a beta of 1.2, what is the firm?s weighted average cost of capital?

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Portland Forest Products Inc. has a cost of debt of 8%, the risk-free interest rate is 3.5% and the expected return on the market portfolio is 8.5%. Portland?s effective tax rate is 30% and its optimal capital structure is 40% debt and 60% equity. If Portland has a beta of 1.2, what is the firm?s weighted average cost of capital?

 

Paper#23693 | Written in 18-Jul-2015

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