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Question: A firm has zero debt and an overall cost of capital of 12.5 percent. The firm is considering a new capital structure with 55 percent debt at an interest rate of 6.5 percent. Assume there are no taxes or other imperfections. What will be the cost of equity capital of the levered firm? The response must be typed, single spaced, must be in times new roman font (size 12) and must follow the APA format.

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