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IBM beta is 1.30, its pre-tax cost of debt is 9%, corporate tax rate is...

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Finance

IBM beta is 1.30, its pre-tax cost of debt is 9%, corporate tax rate is 35%. General return on market portfolio is 12%, risk-free rate is 5%. Its proportion of debt relative to total firm value is 20%, proportion of equity to total firm value is 80%.

a. Calculate the cost of equity.

b. Calculate after-tax cost of debt.

c. Calculate weighted average cost of capital.

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