Compute weighted average cost of capital

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Reference no: EM131087763

Speck delivery can buy a piece of equipment that is anticipated to provide an 11% return and can be financed at 6% with debt. Later in the year, the firm turns down an opportunity to buy a new machine that would yield a 9% return but would cost 15% to finance through common equity. Assume debt and common equity each represent 50% of the firms capital structure. A. Compute the weighted average cost of capital. B. Which project should be accepted? Must show work.

Reference no: EM131087763

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