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Weighted average cost of capital American Exploration, Inc., a natural gas producer, is trying to decide whether to revise it

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Answer #1

WACC = Cost of Debt*Weight of Debt + Cost of Equity*Weight of Equity

= 6%*50% + 12%*50%

= 9%

b.WACC = 6%*80% + 12%*20%

= 7.2%

c.C.Yes, Riskier as higher interest payments

d.WACC = 6%*80% + 16%*20%

= 8%

e.INCREASES

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