Problem #32 Granite Works has 280,000 shares of common stock outstanding at a market price of $13.50 per share.

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Problem #32

Granite Works has 280,000 shares of common stock outstanding at a market price of $13.50 per share. They also have recently issued a bond offering of $2,000,000 with a yield of 7% and it is still selling at par. The risk free rate is 3% and the market risk premium is 5%. The firm has a beta of 0.8 and a tax rate of 34%. What is their weighted average cost of capital.