is currently trading at $8 per share; there are 10.5 million shares outstanding.?Margo also has debt outstanding with a book value of $400million.?The required rate of return on the bond is 10% and the bonds are currently priced in the market at 90% of their book value.?Assume the risk-free rate is 8%, the market risk premium is 9%, Margo's beta is 2, and its tax rate is 35%.
?????a) Calculate the cost of equity using the SML.
?????b) Calculate the weighted average cost of capital.
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