Damocles Inc., a publicly traded firm, has 80million shares trading at $ 10 a share and $

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Damocles Inc., a publicly traded firm, has 80million shares trading at $ 10 a share and $ 200 million in debt (market value and book value). The firm currently has a beta of 1.20 and a pre-tax cost of debt of 5%. The risk free rate is 4% and the market risk premium is 4.5%. The marginal tax rate is 40%. (i) Estimate the current cost of capital for the firm