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10 October, 10:45

The wacc for a firm is 13.00 percent. you know that the firm's cost of debt capital is 10 percent and the cost of equity capital is 20%. what proportion of the firm is financed with debt? assume there are no taxes.

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  1. 10 October, 14:34
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    Answer: 70%

    x Debt = Y, x Equity = (1 - Y) k Firm = x Debt k Debt + x Equity k Equity = = > 0.13 = (Y x 0.1) + ((1 - Y) x 0.20) = = > Y = 0.7
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