Bonds outstanding that are currently selling at par value

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Jack’s Construction Co. (JCC) has 80,000 bonds outstanding that are currently selling at par (face) value. Bonds with similar characteristics are currently yielding 8.5%. 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 currently yielding 4% and the market risk premium is 8%. What is Jack’s weighted average cost of capital? The corporate tax rate is 35%.

Reference no: EM13954833

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