I have a company that has an asset beta of 1.20 and is financed with 30% debt and 70% equity. Their outstanding bonds are traded at 6.5% yield to maturity. Current market returns are at 13% and the risk free rate is 5%. The company has an effective tax rate of 40%. What is the company’s WACC? ,I can the CAPM to get what I think I need for the WACC, the problem is how to work in the yield to maturity? Please show work. Thanks
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