JAK Industries Has 5 Million Shares of Stock Outstanding Selling

question 114

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 ($1000) . If JAK's weighted average tax rate is 34 percent and its cost of equity is 15 percent, what is JAK's WACC?

• A) 9.19%
• B) 12.36%
• C) 12.50%
• D) 12.98%

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