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Calculate the weighted average cost of capital

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Reference no: EM131114270

The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 12 percent and its before-tax borrowing rate is 8 percent. Given a marginal tax rate of 35 percent, calculate 

(a) The weighted-average cost of capital, and 

(b) The cost of equity for an equivalent all-equity financed firm.

Reference no: EM131114270

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