Swensons currently has weighted average cost of capital of, Ask an Expert

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Swenson's currently has weighted average cost of capital of 9.2 percent based upon a combination of debt and equity financing. The firm has no preferred stock. The current debt-equity ratio is .72 and aftertax cost of debt is 5.8 percent. The company just appointed a new president who is considering eliminating all debt financing. All else constant, what will the firm's cost of capital be if the firm switches to an all-equity firm?

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