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What is the company weighted average cost of capital

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Question - Johnson Industries finances its projects with 40 percent debt, 10 percent preferred stock, and 50 percent common stock.

-The company can issue bonds at a yield to maturity of 8.4 percent.

-The cost of preferred stock is 9 percent.

-The risk-free rate is 6.57 percent.

-The market risk premium is 5%.

-Johnson Industries' beta is equal to 1.3

-Assume that the firm will be able to use retained earnings to fund the equity portion of its capital budget.

-The company's tax rate is 30%.

What is the company's weighted average cost of capital (WACC)?

Reference no: EM133092294

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