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MC Question 19
Formulae & Tables
FM (F9) Formulae Sheet
You will get this Formula Table at the exam so learn well how to apply it in your FM (F9) Exam
On a market value basis, GFV Co is financed 70% by equity and 30% by debt. The company has an after-tax cost of debt of 6% and an equity beta of 1·2. The risk-free rate of return is 4% and the equity risk premium is 5%.
What is the after-tax weighted average cost of capital of GFV Co?
A. 5·4%
B. 7·2%
C. 8·3%
D. 8·8%