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Jack's Construction Co. has 100,000 bonds outstanding that are selling at par value. The bonds yield 9.5 percent. The company also has 4.0 million shares of common stock outstanding. The stock has a beta of 1.2 and sells for $55 a share. The U.S. Treasury bill is yielding 5 percent and the market risk premium is 8 percent. Jack's tax rate is 35 percent. What is Jack's weighted average cost of capital
Question 2. The Auto Group has 1,000 bonds outstanding that are selling for $950 each. The company also has 9,400 shares of preferred stock at a market price of $70 each. The common stock is priced at $65 a share and there are 40,000 shares outstanding. What is the weight of the preferred stock as it relates to the firm's weighted average cost of capital

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Category:- Basic Finance
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