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Phillips Equipment has 6,500 bonds outstanding that are sellingat 96.5 percent of par. Bonds with similar characteristics areyielding 6.7 percent, pretax. The company also has 48,000 shares of5.5 percent preferred stock and 75,000 shares of common stockoutstanding. The preferred stock sells for $64 a share. The commonstock has a beta of 1.32 and sells for $41 a share. The preferredstock has a stated value of $100. The U.S. Treasury bill isyielding 2.2 percent and the return on the market is 10.6 percent.The corporate tax rate is 21 percent. What is the weighted averagecost of capital?9.30 percent8.09 percent10.18 percent8.64 percentPlease show work, thank you!
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