Consider the following information for Watson Power Co.:

Debt:		4,500 8.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 102 percent of par; the bonds make semiannual payments.
Common stock:		103,500 shares outstanding, selling for $55 per share; the beta is 1.09.
Preferred stock:		13,500 shares of 7.5 percent preferred stock outstanding, currently selling for $104 per share.
Market:		10.5 percent market risk premium and 7.5 percent risk-free rate.

Assume the company's tax rate is 31 percent.

Find the WACC.

Multiple Choice

• 12.74%

• 12.34%

• 13.35%

• 12.24%

• 12.44%