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Annual weighted average cost of capital

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Romeoville Corporation strives to maintain a capital structure of 44% debt and 56% equity. Investment bankers have stated that if the company were to borrow money, it would have to pay an annual interest rate of 6.2% (kd). The owners' required rate of return on common equity is 10.6% (ke) annually. The firm's marginal income tax rate is 25%. What is its annual weighted average cost of capital (kA or WACC)?

Reference no: EM132017046

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