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Equity used is from reinvested earnings

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Jedi Enterprises stock trades for $44 per share. It is expected to pay a $2.4 dividend at year end, and the dividend is expected to grow at a constant rate of 3.1% a year. The before-tax cost of debt is 5%, and the tax rate is 34%. The target capital structure consists of 40% debt and 60% common equity. What is the company's WACC (in percent) if all the equity used is from reinvested earnings?

Reference no: EM131765062

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