A stock trades for $52.50 er share. It is expected to pay a $2.50

dividend at year end (D1 = $2.50), and the dividend is expected

to grow at a constant rate of 5.50% a year. The before-tax cost of debt is 7.75%, and the tax rate is 40%. The target capital structure consists of 60% debt and 40% common equity. What is the company's WACC?

a. 6.89% b. 8.30% c. 8.02% d. 7.17% e. 7.74%

a.526,297b.530,950c.523,852d.523,045e.$33,993