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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Gaucho Services starts life with all-equity financing and a cost of equity of 12%. Suppose it refinances to the following market-value capital structure:
| Â | Â | Â |
| Â Â Debt (D) | 49% Â Â | at rD = 9.0% |
| Â Â Equity (E) | 51% Â Â | Â |
| Â | ||
Use MMAc€?cs proposition 2 to calculate the new cost of equity. Gaucho pays taxes at a marginal rate of Tc = 30%. Calculate GauchoAc€?cs after-tax weighted-average cost of capital. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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