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    Average cost of capital

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    Hetz Corp is financed 60% by debt with a pretax cost of 10%, and 40% by common equity with a pretax cost of 15%. Hetz Corp's marginal tax rate is 50%. Hetz's weighted average cost of capital is____.

    9.0%, 10.0%, 12.0%, or 12.5% - please advise answer & why - thanks much!

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    Solution Summary

    The average cost of capitals are examined.