Problem 13-7 WACC (LO1) Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $16 per share and has a beta of 0.7. There are 1 million common shares outstanding. The market risk premium is 8%, the risk-free rate is 4%, and the firm's tax rate is 21%. Assets Cash and short-term securities Accounts receivable Inventories Plant and equipment $ 2.0 5.0 9.0 22.0 BOOK -VALUE BALANCE SHEET (Figures in $ millions) Liabilities and Net Worth Bonds, coupon = 6%, paid annually (maturity = 10 years, current yield to maturity = 7%) Preferred stock (par value $10 per share) Common stock (par value $0.10) Additional paid-in stockholders' equity Retained earnings Total $10.0 3.0 0.1 8.9 16.0 $38.0 Total $38.0 a. What is the market debt-to-value ratio of the firm? b. What is University's WACC? (For all the requirements, do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) a. % Market debt-to-value ratio WACC b. %