Suppose the weighted average cost of capital of the Gadget Company is 10%. If Gadget has a
Question:
Suppose the weighted average cost of capital of the Gadget Company is 10%. If Gadget has a capital structure of 50% debt and 50% equity, a before-tax cost of debt of 5%, and a marginal tax rate of 20%, then its cost of equity capital is closest to:
A. 12%.
B. 14%.
C. 16%.
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To calculate the cost of equity capital for the Gadget Company we need to consider its weighted aver...View the full answer
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Related Book For 
Corporate Finance A Practical Approach
ISBN: 9781118217290
2nd Edition
Authors: Michelle R Clayman, Martin S Fridson, George H Troughton, Matthew Scanlan
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