25. TechHub Inc. has 150,000 shares of common stock outstanding at a market price of $20 a share and a market beta of 1.3. The outstanding bond issue of the company has a face value of $2,000,000 and a market price of $1,300. The maturity of the bonds is 20 years and coupon rate is 8%. Coupons are paid semi-annually. There are 70,000 shares of preferred stock outstanding at a market price of $30 a share. The cost of preferred stock of 6%. Market return is 9% and risk- free rate is 3%. The company's tax rate is 35 percent. What is the weighted average cost of capital of TechHub Inc.? A. 7.05% B. 7.35% C. 7.70% D. 8.57% E. None of the above |