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BAC Mining Corporation has 8.5 million shares of common stock outstanding and 290,000 4.7 percent semiannual...

BAC Mining Corporation has 8.5 million shares of common stock outstanding and 290,000 4.7 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $33 per share and has a beta of 1.25; the bonds have a yield to maturity of 3.06% and sell for 114 percent of par. The market risk premium is 7.3 percent, T-bills are yielding 6 percent, and the company’s tax rate is 25 percent. What is the company's WACC?

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8.18%

4.74%

8.85%

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