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Business, 25.05.2021 18:00 star296

6. Your company is capitalized as follows: Bank Loan of $4B at 12% annual effective interest rate; Preferred Stock of $1B at a 14% annual dividend rate; Common Stock with a market cap of $3B. You estimate your shareholder Ke (cost of equity or required rate of return is 16%. Your effective tax rate is 40%. What is your after-tax WACC?

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