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Johnny Cake Ltd. has 10 million shares of stock outstanding selling at $19 per share and an issue of $50 million in 10 percent annual
Johnny Cake Ltd. has 10 million shares of stock outstanding selling at $19 per share and an issue of $50 million in 10 percent annual coupon bonds with a maturity of 17 years, selling at 92.5 percent of par. Assume Johnny Cake's weighted-average tax rate is 34 percent, its next dividend is expected to be $3 per share, and all future dividends are expected to grow at 5 percent per year, indefinitely.
What is its WACC?
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