Question
ABC Radars has 46000 bonds outstanding that are selling at 1297.The bonds outstanding have 24 years to maturity and pay an annual coupon payment of
ABC Radars has 46000 bonds outstanding that are selling at 1297.The bonds outstanding have 24 years to maturity and pay an annual coupon payment of 9%. The company also has 785000 shares of 11 percent preferred stock and 2.5 million shares of common stock outstanding. The preferred stock sells for $ 7 a share. The common stock has a beta of 1.7 and sells for $59 a share. The U.S. Treasury bill is yielding 5 percent and the return on the market is 11.9 percent. The corporate tax rate is 39 percent. What is the firm's weighted average cost of capital?
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