Weighted average cost of capital

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Reference no: EM131048299

Boyd & Bunge Inc. has earnings before interest and taxes of $149,000. Both the book and the market value of debt is $265,000. The unlevered cost of equity is 13.5% while the pre-tax cost of debt is 9%. The tax rate is 34%. What is Boyd & Bunge’s weighted average cost of capital? (Assume there is no cost of financial distress).

Reference no: EM131048299

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