What is the firm waco

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Question - Assume that you are on the financial staff of Jamar Inc, and you have collected the following data: The yield on the company's outstanding bonds is 8%, its tax rate is 21%, the next expected dividend is $1 a share, the dividend is expected to grow at a constant rate of 5% a year, the price of the stock is $16 per share, the flotation cost for selling new shares is F = 10%, and the target capital structure is 35% debt and 65% common equity. What is the firm's WACO, assuming it must issue new stock to finance its capital budget?

Reference no: EM133176455

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