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QUESTION
Coe Corp. has a cost of equity of 15%, and an after tax cost of debt of 8%. Using market values Co's debt is 45% of the value of the firm and Co's...
1. Coe Corp. has a cost of equity of 15%, and an after tax cost of debt of 8%. Using market values Co's debt is 45% of the value of the firm and Co's equity is 55% of the value of the firm. What is Coe Corp. weighted average cost of capital?
2. Doe Corp. can borrow at 14% and is has a 40% marginal tax rate. What is Doe's after tax cost of debt?
