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The Pollos Chicken Company Farms Chickens for Sale to Grocery

question 99

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The Pollos Chicken Company farms chickens for sale to grocery retailers.Pollos is all equity financed and its shareholders require a return of 7%.Gus Poultry Inc.farms chickens for sale to fast food restaurants.Gus Poultry has 20% debt in its capital structure (debt-to-equity is 0.25) ,and its cost of debt is 4%.What is Gus's WACC? Assume that the tax rate is 0%.


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