JAK Industries Has 5 Million Shares of Stock Outstanding Selling

question 44

Multiple Choice

JAK Industries has 5 million shares of stock outstanding selling at $25 per share and an issue of $40 million in 8 percent, annual coupon bonds with a maturity of 15 years, selling at 108 percent of par ($1,000) . If JAK's weighted average tax rate is 21 percent and its cost of equity is 15 percent, what is JAK's WACC?

• A) 9.19 percent
• B) 12.59 percent
• C) 12.50 percent
• D) 12.77 percent

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Definitions:

Light Rays

Streams of photons traveling in a straight line, which are the basis of vision and are instrumental in phenomena such as reflection and refraction.

Retina

A light-sensitive layer at the back of the eye that converts light into neural signals which are sent to the brain.

Cornea

The transparent front part of the eye that covers the iris, pupil, and anterior chamber, providing most of the eye's optical power.

Lens

In the eye, a transparent structure located behind the iris that focuses light onto the retina to produce clear images.