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Business, 19.11.2019 03:31 aidendespatieshakim

Jack's construction co. has 80 bonds outstanding that are selling at their par value of $1,000 each. bonds with similar characteristics are yielding a pretax 8.6 percent. the firm also has 4,000 shares of common stock outstanding. the stock has a beta of 1.1 and sells for $40 a share. the u. s. t-bill is yielding 4 percent, the market risk premium is 8 percent, and the firm's tax rate is 21 percent. what is the firm's weighted average cost of capital assuming its earnings are sufficient to classify all interest as a tax-deductible expense?

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