In: Finance
Delta, Inc. has 10 million shares of common stock outstanding and 120,000 bonds with an 8%, semiannually payable coupon rate and a par value of $1,000 each. The common stock currently sells for $40 per share and has a beta of 1.25. The bonds have 10 years remaining to maturity and sell for 90% of par value. The risk-free rate is 4%, the market risk premium is 8%, and the tax rate is 35%. Using this information, compute the weighted average cost of capital (WACC) for Delta, Inc.