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Two public companies (Jensen and Jackson) operate in the same industry, will generate exactly the same operating profit, and have identical net operating assets. What

Two public companies (Jensen and Jackson) operate in the same industry, will generate exactly the same operating profit, and have identical net operating assets. What is the weighted average cost of capital for each company? Which company will have a lower stock price? Jensen Jackson Total Debt $0 $32,000 Total Shareholder Equity $64,000 $32,000 Cost of Debt 3.5% 5.0% Cost of Equity 5.5% 7.0%

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