(Answered) The beta corporation has an optimal debt ratio of 40

Finance

The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 12 percent and its before-tax borrowing rate is 8 percent. Given a marginal tax rate of 35 percent, calculate

(a) The weighted-average cost of capital, and

(b) The cost of equity for an equivalent all-equity financed firm.

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