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Google Corporation has no debt on its balance sheet in 2008, but paid $1.6 billion...

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Finance

Google Corporation has no debt on its balance sheet in 2008, but paid $1.6 billion in taxes. Assume that Google's marginal tax rate is 35% and Google's borrowing cost is 7%. Assume that investors hold Google stock. Also assume that Google's current pre-tax WACC is 14%. If Google were to issue sufficient debt at a pre-tax cost of 7% to give them a debt to value ratio of 0.5, then the Google's aftertax WACC would be closest to:

A) 10.4%

B) 12.8%

C) 13.0%

D) 15.0%

E) 16.0%

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