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Calculate Calipso weighted average cost of capital

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Question - Calipso beverages has 100,000 shares of stock outstanding, with one share selling for $480 in the stock market. Calipo's shareholders expect a 9% rate of return on their investment. All of the company's debt comes from a $23 million loan it received 5 years ago. The entire loan is to be repaid with a single $23 million payment 10 years from now. Meanwhile, Calipso is making annual interest payments equal to $400,000. Assuming Calipso faces a 17% tax rate, Calculate Calipso's weighted average cost of capital?

Reference no: EM133027848

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