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You would like to estimate the weighted average cost of capital for a new airline business. Based on its industry asset beta, you have already estimated an unlevered cost of capital for the firm of 9 %. However, the new business will be 27% debt financed, and you anticipate its debt cost of capital will be 5%. If its corporate tax rate is 32 %, what is your estimate of its WACC?

A. The equity cost of capital is % (Round to one decimal place.)

B. WACC (Round to two decimal places)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92381834

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