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Marginal Cost of Capitol

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The weighted average cost of capital for firm X is currently 10%. Firm X is considering a new project but must raise new debt to finance the project. Debt represents 25% of the capital structure. If the after-tax cost of debt will rise from 7% to 8%, what is the marginal cost of capital?
A) 10.25%
B) 10.75%
C) 12.00%
D) not enough information.

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The solution examines marginal cost of capitol.

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