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Construction Co. has 70,000 bonds outstanding that are selling at par value. The bonds yield 7 percent. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1 and sells for $30 a share. The U.S. Treasury bill is yielding 3 percent and the market risk premium is 6 percent. Jack's tax rate is 34 percent. What is Jack's weighted average cost of capital?
7.39 percent
8.38 percent
4.40 percent
4.11 percent
7.66 percent
Dec 04 2019 View more View Less
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