What is its weighted average cost of capital

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Reference no: EM131594595

Jones Machine Tool. is an MNC located in the U.S. Jones would like to estimate its weighted average cost of capital. On average, bonds issued by Jones yield 10.5 percent. Currently, T-bond rates are 2.5 percent. Furthermore, Jones’ stock has a beta of 1.7, and the return on the S&P500 stock index is expected to be 12 percent. Jones’ target capital structure is 25 percent debt and 75 percent equity. If Jones is in the 35 percent tax bracket, what is its weighted average cost of capital?

Reference no: EM131594595

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