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Business, 25.04.2020 01:43 kell22wolf

1. Jack's Construction Co. has 80,000 bonds outstanding that are selling at par value. The before-tax cost of debt is 8.5%. The company also 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%. What is Jack's weighted average cost of capital?

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