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%

You were hired as a consultant to Giambono Company, whose target capital structure is 45% debt, 15% preferred, and 40% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.00%, and the cost of retained earnings is 12.25%. The firm will not be issuing any new stock. What is its WACC?

a. 8.42%

b. 5.95%

c. 7.60%

d. 8.65%

e. 3.75%