What is jake weighted average cost of capital

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Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. The stock has a beta of 1.1. The U.S. Treasury bill is yielding 4% and the market risk premium is 8%. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7 % coupon, pay interest semiannually, and mature in 4.89 years. The bonds are selling at 99% of face value. The company's tax rate is 34%. Required: What is Jake's weighted average cost of capital?

Reference no: EM132530986

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