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The current structure of firm A is 10% debt with a beta of 1.52. An...

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Finance

The current structure of firm A is 10% debt with a beta of 1.52. An investment banker provides the following table.

percent financed with debt Before tax cost debt

10% 7.3%

20% 11%

40% 18%

Risk free rate 2.5%

market risk premium 6.2%

tax rate 25%

Find the cost of equity when debt is 40%. ( round to four decimal places, put as a number not percentage)

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