6

A company has the following data associated with it:

• A target capital structure of 10% preferred stock, 50% common equity and 40% debt.
• Outstanding 20-year bond with 6% coupon, paid annually. The bond is selling for $894.
• Common stock selling for $45 per share that is expected to grow at 8% and expected to pay a $2 dividend one year from today.
• The preferred stock pays $5 annual dividend and currently sells for $90.
• The company's tax rate is 40%.

What is the weighted average cost of capital (WACC)?

	A.	7.41%
	B.	8.46%
	C.	9.58%
	D.	10.30%
	E.	10.90%