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Cost of Capital

Please tell me how to find K given the parameters in the problem for #9.50. You can see how I'm trying to do it, but I can't figure out what to plug in for Cd and Ce from what's given.


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We are given that cost of equity is 22%. Before tax cost of debt is 13%. Tax rate is 40% and debt to equity ratio is 45%. The first thing is to calculate the after tax cost of debt. The after tax cost ...

Solution Summary

The solution explains the calculation of the weighted average cost of capital