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Category > Accounting Posted 25 May 2017 My Price 3.00

Gaucho Services starts life with all-equity financing and a cost of equity of 12%

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:
     
  Debt (D) 49%    at rD = 9.0%
  Equity (E) 51%     
 

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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Alpha Geek
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Status NEW Posted 25 May 2017 10:05 AM My Price 3.00

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file 1495709269-Answer.docx preview (117 words )
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