Your boss, whose background is in financial planning, is concerned about the company’s high weighted average cost of capital (WACC) of 25%. He has asked you to determine what combination of debt-equity financing would lower the company’s WACC to 15%. If the cost of the company’s equity capital is 6% and the cost of debt financing is 29%, what debt-equity mix would you recommend?

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Your boss, whose background is in financial planning, is concerned about the company’s high weighted average cost of capital (WACC) of 25%. He has asked you to determine what combination of debt-equity financing would lower the company’s WACC to 15%. If the cost of the company’s equity capital is 6% and the cost of debt financing is 29%, what debt-equity mix would you recommend?

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