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Another Co. has both debt and common equity as part of its capital structure. In particular, the company has 1 million shares of equity outstanding
Another Co. has both debt and common equity as part of its capital structure. In particular, the company has 1 million shares of equity outstanding and 30,000,000 20-year bonds (that were just issued). The current share price is $32.50. Furthermore, the beta of the firm is 1.75 while the market risk premium is 10.5% and the expected return on the market is 14.5%. The face value of the bonds is $1,000 and the annual coupon rate is 9%. Their current long-term bonds are selling for $980. If the corporate tax rate is 40% what is the WACC of the Another Co.? Select one: O a. 12.05% O b. 14.42% O c. 15.74% O d. 13.00%
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