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Surf Rider Inc. has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to...

Surf Rider Inc. has 10,000 bonds outstanding with a 6% annual coupon rate, 8 years to maturity, a $1,000 face value, and a $1,100 market price. The company’s 100,000 shares of preferred stock pay a $3 annual dividend, and sell for $60 per share. The company’s 500,000 shares of common stock sell for $20 per share and have a beta of 1.2. The risk-free rate is 4%, and the market return is 12%. Assuming a 40% tax rate, what is the company’s WACC?

A. 7.11 percent

B. 7.37 percent

C. 7.25 percent

D. 7.53 percent

E. 7.88 percent

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jeff jeffy answered 1 year ago
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