Phillips Equipment has $80,000$ bonds outstanding that are selling at par.

Bonds with similar characteristics are yielding $7\mathrm{.}5$ percent. The company

also has $750,000$ shares of $7$ percent preferred stock and $2\mathrm{.}5$ million shares

of common stock outstanding. The preferred stock sells for $$65$ a share.

The common stock has a beta of $1\mathrm{.}34$ and sells for $$42$ a share. The cost of

equity is $12$ percent. The corporate tax rate is $28$ percent. What is the firm's

weighted average cost of capital?

$9\mathrm{.}48$ percent

$9\mathrm{.}83$ percent

$10\mathrm{.}41$ percent

$11\mathrm{.}30$ percentPhillips Equipment has $80,000$ bonds outstanding that are selling at par. Bonds with similar characteristics are yielding $7\mathrm{.}5$ percent. The company also has $750,000$ shares of $7$ percent preferred stock and $2\mathrm{.}5$ million shares of common stock outstanding. The preferred stock sells for $$65$ a share. The common stock has a beta of $1\mathrm{.}34$ and sells for $$42$ a share. The cost of equity is $12$ percent. The corporate tax rate is $28$ percent. What is the firm's weighted average cost of capital?