Question: A firm has a capital structure with $100 million in equity and $50 million of debt. The cost of equity capital is 12% and the

A firm has a capital structure with $100 million in equity and $50 million of debt. The cost of equity capital is 12% and the pretax cost of debt is 6%. If the marginal tax rate of the firm is 40%, compute the weighted average cost of capital of the firm.

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