Solved: Peters tax rate is 35 percent what is peters weighted, Business Economics

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Peters tax rate is 35 percent what is peters weighted

Peter's Audio has 72,000 bonds outstanding that are selling at par value. The bonds have a yield to maturity of 6.95 percent. The company also has 5 million shares of common stock outstanding. The stock has a beta of 1.25 and sells for $28 a share. The U.S. Treasury bill is yielding 3 percent and the market risk premium is 7 percent. Peter's tax rate is 35 percent. What is Peter's weighted average cost of capital?

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Business Economics: Peters tax rate is 35 percent what is peters weighted

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