David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity

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David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company’s outstanding bonds is 9%, and the company’s tax rate is 40%. Ortiz’s CFO has calculated the company’s WACC as 9.96%.

 

What is the company’s cost of equity capital?

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