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Berkley's Has Expected Earnings Before Interest and Taxes of $3,800

question 61

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Berkley's has expected earnings before interest and taxes of $3,800. Its unlevered cost of capital is 14.5% and its tax rate is 35%. Berkley's has debt with both a book and a face value of $2,200. This debt has a 7.5% coupon and pays interest annually. What is the firm's weighted average cost of capital?


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