Solved: The us treasury bill is yielding 4 and the market risk, Business Management

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The us treasury bill is yielding 4 and the market risk

Jack's Construction Co. has 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8.5 %. Face value of a bond is $1000. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4 % and the market risk premium is 8 %. Jack's tax rate is 35 %. What is Jack's weighted average cost of capital?

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Business Management: The us treasury bill is yielding 4 and the market risk

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