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A firm has 1,200,000 shares of stock outstanding with a price per share equal to $14. There are 10,000 bonds outstanding, priced at $1,125 each.
A firm has 1,200,000 shares of stock outstanding with a price per share equal to $14. There are 10,000 bonds outstanding, priced at $1,125 each. The cost of equity is 14 percent, the cost of debt is 8 percent, and the corporate tax rate is 40 percent. What is the WACC?
a. | 9.8 percent. | |
b. | 10.3 percent. | |
c. | 8.8 percent. | |
d. | 10.8 percent. |
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