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Your firm is considering a project that is considered average risk by your firm. Overall your firm's Beta is 0.77, the expected market risk premium is 9.8%, and the risk free rate of return is 3.1%. Your firm also has 7.4% semi-annual coupon bonds with 9 years until maturity currently selling for 108.50% of par value. The corporate tax rate is 35% and your firm has a D/E ratio of 1.25.

a) What is the cost of equity?

b) What is the cost of debt?

c) What are the capital structure weights

d) What is this firm's weighted average cost of capital?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9792351

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