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Question: prudential transportation has 600000 shares of common stock outstanding at...

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Prudential Transportation has 600,000 shares of common stock outstanding at a market price of $25 a share. Last month, Prudential Transportation paid an annual dividend in the amount of $1.00 per share. The dividend growth rate is 5%. Prudential Transportation also has 21,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 5% coupon, pay interest annually, and mature in 10 years. The bonds are selling at 104% of face value. The company's tax rate is 25%. What is Prudential Transportation's weighted average cost of capital?

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