Home / Questions / Construction Co. has 80,000 bonds outstanding that areselling at par value. Bonds with sim
Construction Co. has 80,000 bonds outstanding that areselling at par value. Bonds with similar characteristics areyielding 8.6 percent. The company also has 4 million shares ofcommon stock outstanding. The stock has a beta of 1.1 and sells for$40 a share. The U.S. Treasury bill is yielding 4 percent and themarket risk premium is 8 percent. Jack's tax rate is 34 percent.What is Jack's weighted average cost of capital?
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