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Business, 24.02.2020 16:51 ayoismeisalex

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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The Beta Corporation has an optimal debt ratio of 40 percent. Its cost of equity capital is 12 perce...
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