A firm has a capital structure with 30 million in equity, Ask an Expert

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A firm has a capital structure with $30 million in equity and $90 million of debt. The cost of equity capital is 10% and the pretax cost of debt is 6%. If the marginal tax rate of the firm id 40%, compute the weighted average cost of capital of the firm.

a. 4.9%
b. 4.6%
c. 5.8%
d. 5.2%

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