Question: Speedy Ltd needs $15,000,000 for a new project. The flotation cost for new equity is 7.2%, but the flotation cost for new debt is 2.5%.

Speedy Ltd needs $15,000,000 for a new project. The flotation cost for new equity is 7.2%, but the flotation cost for new debt is 2.5%. Companys target capital structure is 60% equity and 40% debt, and the relevant tax rate is 30%. What is Speedy Ltds weighted average flotation cost?

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