Weighted-average cost of capital

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Moffett Machinery has 20 million shares of outstanding common stock, each with a market price of $18/share. The remainder of the firm's capital structure consists of $600 million worth of bonds selling at 90% of par and carrying an 8.5 percent yield to maturity. What is Moffett Machinery's weighted-average cost of capital? Assume a 34 percent average tax rate and a 13% cost of equity capital.

Reference no: EM13947730

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