How much is added to a firm's weighted average cost of capital for 45% debt financing with a required rate of return of 10% and a tax rate of 35%?
A) 1.29%
B) 2.93%
C) 3.50%
D) 4.50% Component cost of debt = .45 x (1 - .35) .10
= ) 45 x (.65 x .10)
= ) 45 x .065
Correct Answer:
Verified
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