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Solid Construction Company has the following amounts of interest-bearing debt and common equity capital: Financing Dollar Interest...

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Finance

Solid Construction Company has the following amounts ofinterest-bearing debt and common equity capital: Financing DollarInterest Cost of Source Amount Rate Equity Short-Term Loan $300,00010% Long-Term Loan $100,000 18% Equity Capital $600,000 22% SolidConstruction is in the 30 percent average tax bracket. Theafter-tax weighted average cost of capital (WACC) for Solid is (a)16.56%. (b) 16.84%. € 17.12%. (d) 18.84%. € None of the above.

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Short term loan 300000 Cost of short term loan 10 Long term loan 100000 Cost of long term loan 18 Equity 600000 Cost of equity 22 Total capital Short term loan Long term loan    See Answer
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Solid Construction Company has the following amounts ofinterest-bearing debt and common equity capital: Financing DollarInterest Cost of Source Amount Rate Equity Short-Term Loan $300,00010% Long-Term Loan $100,000 18% Equity Capital $600,000 22% SolidConstruction is in the 30 percent average tax bracket. Theafter-tax weighted average cost of capital (WACC) for Solid is (a)16.56%. (b) 16.84%. € 17.12%. (d) 18.84%. € None of the above.

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