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What is the weighted average pre tax cost of capital

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Reference no: EM132467645

Problem - A company has a market value of $500 million.

It has a market value of equity of $200 million, a market value of long term debt of $150 million.

The cost of equity is 12%, the cost of long term debt is 8%, and the cost of short term debt is 6%. The marginal tax rate is 35%.

Required - What is the weighted average pre tax cost of capital (WACC) for this company?

Reference no: EM132467645

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