Johnson Industries finances its projects with 40 percent debt,
10 percent preferred stock, and 50 percent common stock.
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The company can issue bonds at a yield to maturity of 6.7 percent. |
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The cost of preferred stock is 9 percent. |
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The company's common stock currently sells for $35 a share. |
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The company's dividend has just paid $2.00 a share (D0 = $2.00), and is expected to grow at a constant rate of 7 percent per year. |
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Assume that the flotation cost on debt and preferred stock is zero, and no new stock will be issued. |
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The company's tax rate is 30 percent. |
What is the company's weighted average cost of capital (WACC)?
Express your answer in percentage (without the % sign) and round it
to two decimal places.
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