Calculate the weighted average cost of capital

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Reference no: EM131176759

Calculate the weighted average cost of capital for Carla Computer Company. The book value of Carla’s outstanding debt is $10 million. Currently, the debt is selling in the market at 110 percent of its book value and is priced to yield 12 percent. The one million outstanding shares of Carla’s stock are selling for $25 per share. The required rate of return on Carla stock is 20 percent. The tax rate is 34 percent.

Reference no: EM131176759

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