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You are looking at the following information:   Debt: 3,500 5.5 percent coupon bonds outstanding, $1,000 par...

You are looking at the following information:  

Debt:

3,500 5.5 percent coupon bonds outstanding, $1,000 par value, 18 years to maturity, selling for 103 percent of par; the bonds make semiannual payments.

Common stock:

73,500 shares outstanding, selling for $56 per share; the beta is 1.17.

Preferred stock:

12,500 shares of 4.5 percent preferred stock outstanding, currently selling for $105 per share.

Market:

6.5 percent market risk premium and 4 percent risk-free rate.

  

The company is in the 32 percent tax rate bracket based on its corporate income.  

Required:

Find the WACC

  • 7.42%

  • 8%

  • 7.73%

  • 7.23%

  • 7.33%

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