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ChristmasTree Corp. has 275,000 shares of common stock and 19,000 6.75% annual coupon bonds outstanding. The bonds have a par value of $1,000 each, 22
ChristmasTree Corp. has 275,000 shares of common stock and 19,000 6.75% annual coupon bonds outstanding. The bonds have a par value of $1,000 each, 22 years to maturity and sell for 117% of par. The common stock currently sells for $61, the last dividend paid was $0.45, and dividends of the firm are expected to grow at 15% per year in perpetuity. If the firm's tax rate is 35%, what is the firm's weighted average cost of capital? O A) 10.33% OB) 11.36% C) 9.90% D) 8.20% E) 8.82%
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