A firm has a capital structure with 100 million in equity, Ask an Expert

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A firm has a capital structure with $100 million in equity and $100 million of debt. The cost of equity capital is 14% and the pretax cost of debt is 8%. If the marginal tax rate of the firm is 30%, compute the weighted average cost of capital of the firm.

A) 9.8%
B) 10.3%
C) 11.1%
D) 11.7%

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