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| A company has the following information: A target capital structure of 40% debt and 60% equity. $1,000 par value bonds pay 10% coupon (semi-annual payments), mature in 20 years, and sell for $849.54. The company stock beta is 1.2. Risk-free rate is 10%, and market risk premium is 5%. The company's marginal tax rate is 40%. The weighted average cost of capital (WACC) is closest to: A)13.0%. B)12.5%. C)13.5%. |