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International Exchange has three divisions: A, B, and C. Division A has the least risk and Division C has the most risk. The firm has an aftertax cost of debt of 6.1 percent and a cost of equity of 14.3 percent. The firm is financed with 35 percent debt and 65 percent equity. Division A's projects are assigned a discount rate that is 3 percent less than the firm's weighted average cost of capital. What is the discount rate applicable to Division A?

7.98 percent

8.27 percent

8.44 percent

9.48 percent

13.43 percent

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91935216

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