Adjusted

WACC.

Hollydale's will issue an additional

7,000

bonds with the help of an investment banker. The bonds will be semiannual bonds with a maturity of

21

years. The coupon rate will be

11.5%,

and the par value

$1,000.

These bonds will be sold at

$1,285.46

in the market, but the investment banker will receive a

4%

commission on the sold bonds. The original bonds have

15

years to maturity and are semiannual, with a coupon rate of

10%

and a price of

$1,275.88.

There are

14,000

bonds outstanding from this senior issue. What is the new cost of capital for Hollydale's if the company still has

470,000

shares outstanding selling at

$20.81

with an annual dividend growth rate of

4.5%

and the last annual dividend of

$2.50?

The tax rate remains at

25%.

What is the adjusted WACC for Hollydale's if the corporate tax rate is

25%?