Use the given information to calculate weighted average cost of capital.
Superb Manufacturing company has 9 million shares of common stock outstanding. The current share price is PKR 52, and the book value per share is PKR 10. The company currently paid PKR 4 as dividend and it is expected to grow at 4 percent. The company also issued bonds twice which stand outstanding. The first bond issue has book price 70 million with face value per share PKR 1000, an 8 percent coupon, and sells for 104 percent of face value. The second issue has book value of 50 million, with face value per share PKR 1000, a 7.5 percent of coupon, and sells for 97 percent face value. The first issue matures in 10 years and second in 6 years. Assume that overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make annual payments. The tax rate is 35 percent. Use the given information to calculate weighted average cost of capital.
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