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Naulls Industries currently has a capital structure that consists of 75 percent common equity and 25 percent debt. The company has 20-year bonds outstanding with
Naulls Industries currently has a capital structure that consists of 75 percent common equity and 25 percent debt. The company has 20-year bonds outstanding with an annual coupon rate of 12 percent and a face value of $1,000. The bonds sell today for $1,200. The firm's common stock has a beta of 1.2; the risk-free rate is 5 percent; and the market risk premium is 6 percent. If the company's tax rate is 40 percent, what is the company's current WACC?
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