35

a 35. Cream and Crimson has a capital structure of 40% debt and 60% equity. The tax rate is 26%. The firm's bonds currently trade in the market for $784. These face value $1,000 bonds have a coupon rate of 8%, paid semiannually, with 7 years to maturity. The firm's common stock trades for $15 per share. The dividend just paid was $2.00 and future dividends are expected to grow at 6% per year. Cream and Crimson's WACC is %. a. 14.15 b. 14.60 c. 15.55 d. 15.70 e. 15.86