Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the company's outstanding bonds is 8.50%, its tax rate is 25%, the next expected dividend is $0.85 a share, the dividend is expected to grow at a constant rate of 6.00% a year, the price of the stock is $19.50 per share, the flotation cost for selling new shares is F = 10%, and the target capital structure is 35% debt and 65% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?

a. 8.71%

b. 10.02%

c. 9.28%

d. 9.47%

e. 8.26%

Daves Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information. (1) The firm's noncallable bonds mature in 20 years, have a 9.00% annual coupon, a par value of $1,000, and a market price of $1,000. (2) The company's tax rate is 25%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.70. (4) The target capital structure consists of 40% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any new common stock. What is its WACC? Do not round your intermediate calculations.

a. 12.90%

b. 9.59%

c. 11.01%

d. 10.59%

e. 11.91%