What is the company's cost of equity capital?
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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 bond is 9 percent, and the company tax rate is 40 percent. Ortiz's CFO has calculated the company's WACC as 9.96 percent. What is the company's cost of equity capital?
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WACC is the weighted average cost of capital whereby the target proportions of debt and equity along with the component costs of capital are ...
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