D. L. Trucking has 175,000 shares of common stock outstanding at a market price of $28 a share and a market beta of 0.9. There are 25,000 shares of preferred stock outstanding at a market price of $40 a share. The cost of preferred stock of 8.9 percent. The outstanding bond issue of the company has a face value of $1,255,000 and a market price of $1200. The maturity of the bonds is 10 years and coupon rate is 9%. Coupons are paid semi-annually. Market return is 14% and risk-free rate is 5%. The company's tax rate is 40 percent. What is the weighted average cost of capital of D. L. Trucking?

A. 10.63%

B. 10.88%

C. 11.15%

D. 13.61%

E. None of the above

The weighted average cost of capital (WACC) for a hotel business:

A. is the return investors require on the total assets of the firm.

B. is unaffected by changes in corporate tax rates.

C. should be used as the required return when analyzing a potential acquisition of a restaurant.

D. is equivalent to the aftertax cost of the firm's liabilities

10. The Daily Brew is analyzing a new project which requires an initial investment of $420,000 for equipment. The average flotation cost is 10.5 percent. What is the initial cost of the project including the flotation costs?

A. $380,090

B. $420,000

C. $464,100

D. $469,274

E. None of the above