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Question: A company has 950,000 shares of common stock outstanding at a market price of $38 a share. The book value of these shares is $30.49 per share. The company also has 40,000 bonds outstanding that are trading at 106% of face value. The face value on these bonds is $1,000. What weight should be given to the debt when the firm computes its weighted average cost of capital?

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Category:- Basic Finance
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