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Kosmo, Inc. has a market value capital structure of 25% debt and 75% equity. The tax rate is 40%. The firm's bonds currently trade in
Kosmo, Inc. has a market value capital structure of 25% debt and 75% equity. The tax rate is 40%. The firm's bonds currently trade in the market for $930. These bonds have a face value of $1,000, coupon rate of 8% paid semiannually, and 10 years remaining to maturity. The firm's common stock trades for $15 per share. The firm has just paid a dividend of $2.00. Future dividends are expected to grow at 3% per year. Based on this information, Ma, Inc.'s WACC is ___ %.
1) 13.91
2) 12.17
3) 11.94
4) 10.98
5) 13.26
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