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What is estimate of the weighted average cost of capital

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Reference no: EM132894239

Question 1: You are analyzing a firm with debt as a percent of total capital at market value equal to 35 percent. The yield to maturity on the firm's long-term debt is 4.00 percent. The firm has no preferred stock. The firm's corporate tax rate is 25 percent. The risk-free rate is 1.25 percent, the equity risk premium is 7.50 percent and beta equals 1.00. If you use the Capital Asset Pricing Model to estimate the cost of equity, what is your estimate of the weighted average cost of capital?

Reference no: EM132894239

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