Question Richmond Ltd has a cost of equity of 12% (calculated assuming a classical tax...
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Richmond Ltd has a cost of equity of 12% (calculated assuming a classical tax system), a pre-tax cost of debt of 4.5%, and is financed 60% with equity and 40% with debt. The corporate tax rate is 30%. What is this firms weighted average cost of capital assuming that investors can utilise 80% of the franking credits paid by the firm? (3 marks)
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