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Problem:

BlockOut Co. has 77,293 bonds outstanding that are selling at par value. The bonds yield 8 percent. The company also has 4.2 million shares of common stock outstanding. The stock has a beta of 1.24 and sells for $49.8 a share. The U.S. Treasury bill is yielding 4.2 percent and the market risk premium is 7.6 percent. Blackout's tax rate is 35 percent.

Required:

Question: What is the firm's weighted average cost of capital?

Note: Provide support for rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167359

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