The Upper Tier has a current debt-equity ratio of .52 and a target debt-equity ratio of .45.The cost of floating equity is 9.5 percent and the flotation cost of debt is 6.6 percent.What should the firm use as their weighted average flotation cost?
A) 8.01 percent
B) 8.51 percent
C) 8.33 percent
D) 7.76 percent
E) 8.60 percent
Correct Answer:
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