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Johnson Industries finances its projects with 40% debt, 10% preferred stock, and 50% common stock.

· The company can issue bonds at a YTM of 8.4%.

· The cost of preferred stock is 9%.

· The risk-free rate is 6.57%.

· The market risk premium is 5%.

· Johnson Industries' beta is equal to 1.3.

· Assume that the firm will be able to use retained earnings to fund the equity portion of its capital budget.

· The company's tax rate is 30%.

What is the company's WACC?

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