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 0.9. There are 1 million common shares outstanding. The market risk premium is 11%, the risk-free rate is 7%, and the firm's tax rate is 21% Assets Cash and short-tern securities Accounts receivable Inventories Plant and equipment $ 1.0 3.0 7.0 21.0 BOOK-VALUE BALANCE SHEET (Figures in 5 millions) Llabilities and Net Worth Bonds, coupon - 6%, paid annually (naturity = 10 years, current yield to naturity = 7%) Preferred stock (par value $10 per share) Common stock (par value 50.20) Additional paid in stockholders' equity Retained earnings Total $ 5.0 3.0 0.2 11.8 12.0 $32.0 Total $32.0 a. What is the market debt-to-value ratio of the firm? b. What is University's WACC