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ABC Company has a target capital structure of 40% debt and 60% equity. ABC's pretax cost of debt will remain at 9% until the firm raises more than $200,000 in new debt capital, at which point the pretax cost of debt will increase to 9.5%. ABC's cost of equity will increase when more than $400,000 in equity capital is raised. What is ABC's break point for debt capital?
Sagot :
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