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14?21. (Weighted average cost of capital)




Question;14?21.;(Weighted average cost of capital) In the spring of last year Tempe Steel;learned that the firm would need to re-evaluate the company?s weighted average;cost of capital following a significant issue of debt. The firm now has;financed 45% of its assets using debt and 55% using equity. Calculate the;firm?s weighted average cost of capital where the firm?s borrowing rate on debt;is 8%, it faces a 40% tax rate, and the common stockholders require a 20% rate;of return.


Paper#58106 | Written in 18-Jul-2015

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