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Problem:

Jack's Construction Co. has 90,000 bonds outstanding that are selling at par value. The bonds yield 8 percent. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $30 a share. The U.S. Treasury bill is yielding 3 percent and the market risk premium is 7 percent. Jack's tax rate is 34 percent.

Task:

What is Jack's weighted average cost of capital?

8.65 percent
8.38 percent
9.37 percent
5.39 percent
5.10 percent

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162666

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