In: Finance
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%