Johnny Cake Limited has 12 million shares of stock outstanding selling at $17 per share and an issue of $60 million in 9 percentannual coupon bonds with a maturity of 18 years, selling at 91.5 percent of par. Assume Johnny Cake's weighted-average tax rate is21 percent, it cannot make use of interest tax shields for the foreseeable future, its next dividend is expected to be $3 per share,and all future dividends are expected to grow at 6 percent per year, indefinitely.What is its WACC?Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.WACC%

WACC=0.1636 or 16.36%Johnny Cake Limited's Weighted Average Cost of Capital (WACC) is approximately…

Answered: Johnny Cake Limited has 12 million…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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