Debt:		3,000 8.5 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 104 percent of par; the bonds make semiannual payments.
Common stock:		69,000 shares outstanding, selling for $64 per share; the beta is 1.12.
Preferred stock:		10,000 shares of 8 percent preferred stock outstanding, currently selling for $107 per share.
Market:		9 percent market risk premium and 7.5 percent risk-free rate.

Assume the company's tax rate is 32 percent.

Answers given:

11.95%

12.12%

11.85%

12.89%

12.35%