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    Cost of Equity, Debt, Weight of Debt & Weighted Cost of Capital

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    How would you calculate the cost of equity, cost of debt, weight of debt and weight of debt and weighted cost of capital with the following given information.

    debt-to-equity ratio = .25
    beta of common = 1.15
    beta of debt = .3
    market risk of premium = 10%
    risk-free rate = 6%
    corporate tax rate = 35%
    weight of equity = 80%

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    Solution Preview

    Rf=Risk free rate = 6%
    Beta of common stock =1.15
    Market risk premium = (Rm-Rf)=10%

    Cost of Equity=Rf+beta of ...

    Solution Summary

    Calculations fully shown to find these 4 measures when given numerous capital budgeting data.