Question: Jake's Sound Systems has 2 1 0 , 0 0 0 shares of common stock outstanding at a market price of $ 3 6 a

Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid an annual dividend in the amount of $1.593 per share. The expected long-term dividend growth rate is 4%. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7% coupon, pay interest annually, and mature in 10 years. The bonds are selling at $1,050. The company's tax rate is 40%. What is Jake's weighted average cost of capital?

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