Assume that a company wishes to sell $6 million worth of bonds and $14 million worth of

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Assume that a company wishes to sell $6 million worth of bonds and $14 million worth of common stock. The bonds have 13 percent before-tax interest and the stock is expected to pay $1.4 million in dividends. The growth rate of dividends has been 8 percent and is expected to continue at the same rate. Determine the weighted average cost of capital if the tax rate on income is 50 percent.

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