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    David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity.

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    David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity. The yield to maturity on the company's outstanding bonds is 9 percent, and the company's tax rate is 40 percent. Ortiz's CFO has calculated the company's WACC as 9.6 percent. What is the company's cost of equity capital?

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