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Charlottes Crochet Shoppe has 17,000 shares of common stock outstanding at a price per share of $84 and a rate of return of

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Answer #1

Market value of common stock = 17,000 * 84 = 1,428,000

Market value of bonds = 370 * (0.999 * 2000) = 739,260

Total market value = 1,428,000 + 739,260 = 2,167,260

WACC = Weights * costs

WACC = (1,428,000 / 2,167,260)*0.1197 + (739,260 / 2,167,260)*0.0631*(1 - 0.35)

WACC = 0.07887 + 0.01399

WACC = 0.0929 or 9.29%

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