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A firm with a corporate wide debt-to-equity ratio of 1:2 an after-tax cost of debt of 7% and a cost of equity capital of 15% is interested in pursuing a foreign project. The debt capacity of the project is the same as for the company as a whole, but its systematic risk is cub that the required return on equity is estimated to be about 12%. The after-tax cost of debt is expected to remain at 7%. What is the project's weighed average cost of capital? How does it compare with the parent's WACC?

Reference no: EM13698342

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