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Question
A firm has 1,200,000 shares of stock outstanding with a price per share equal to $14. There are 10,000 bonds outstanding, priced at $1,125 each. The cost of equity is 14 percent, the cost of debt is 8 percent, and the corporate tax rate is 40 percent. What is the WACC?
a) 10.3 percent.
b) 10.8 percent.
c) 9.8 percent.
d) 8.8 percent.
Answer
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