Calculating the WACC In the previous problem, suppose the company’s stock has a beta of 1.2. The risk-free rate is 5.2 percent, and the market risk premium is 9 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues.

Both bonds make semiannual payments. The tax rate is 35 percent. What is the company’s WACC?

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