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HUNK Limited has hired you on as a consultant to assist with their capital budgeting. Their target capital structure is 30% debt, 10% preferred stock,

HUNK Limited has hired you on as a consultant to assist with their capital budgeting. Their target capital structure is 30% debt, 10% preferred stock, and 60% common equity. The interest rate on new debt is 6.00%, the yield on the preferred stock is 8.00%, the cost of retained earnings is 11.00%, and the tax rate is 35%. The company will not be issuing any new stock. What is their WACC? (Ch. 10)

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7.71%

8.57%

8.03%

9.20%

6.86%

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