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JJ's Ice Cream has 1,800 bonds outstanding that are selling for $1,015 each, mature in...

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Finance

JJ's Ice Cream has 1,800 bonds outstanding that are selling for $1,015 each, mature in 11 years, and have an after-tax yield of 6.2 percent. There are 45,000 shares of common stock outstanding with a market price of $50 a share. The beta of this stock is 0.6625, the next annual dividend on this stock will be $2.40 per share, and that dividend will have annual increases thereafter of 2.5 percent (forever). T

he risk-free rate is 2 percent, the market risk premium is 8 percent, and the tax rate is 35 percent. What is the companys weighted average cost of capital?

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