Problemjacks construction co has 80000 bonds outstanding, Ask an Expert

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Problem:

Jack's construction Co. has 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8.5%. The company alson has 4 million shares of common stock outstanding. the stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4% and the market risk premium is 8%. Jack's tax rate is 35%.

Required:

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

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172057

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