What will the new weighted average cost of capital be

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Reference no: EM131967782

Land Rover Corp. is currently an all equity firm worth $100M. Land Rover's cost of equity is currently 14% and its tax rate is 30%.

Management is thinking of issuing $20M worth of debt and using all that money to buy back stock. If the cost of debt is 6%.

What will the new weighted average cost of capital be? Assume the cost of equity DOES NOT change.

Reference no: EM131967782

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