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A firm currently has a debt-equity ratio of 1/2. The debt, which is virtually riskless, pays an interest rate of 7 %. The expected rate of return on the equity is 14 %. What is the Weighted-Average Cost of Capital if the firm pays no taxes? Enter your answer as a percentage rounded to two decimal places. 

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Answer #1

14%+(1/2 * (14%-7%))= 10.5%

answered by: Jack Who
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