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Debt: 500 4% coupon bonds outstanding, with a par value of $1,000, 10 years to maturity, trading at $950 and making semi-annual payments. Equity: 20,000
Debt: 500 4% coupon bonds outstanding, with a par value of $1,000, 10 years to maturity, trading at $950 and making semi-annual payments.
Equity: 20,000 shares outstanding and trading at a price of $40 per share. The current dividend is $1 per share and the expected earnings growth rate is 5%.
A) What is the WACC? Assume a tax rate of 30%
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