Question $10$

AZ Products has $375,000$ shares of common stock outstanding at a market price of $$32$ a share. Next year's annual dividend is

expected to be $$1\mathrm{.}50$ a share and the dividend growth rate is $2$ percent. The firm also has $7,500$ bonds outstanding with a face value

of $$1,000$ per bond. The bonds have a pretax yield of $7\mathrm{.}65$ percent and sell at $98\mathrm{.}6$ percent of face value. The company's tax rate is

$24$ percent. What is the firm's weighted average cost of capital?

Excel Template.xIsx

$6\mathrm{.}52$ percent

$5\mathrm{.}41$ percent

$6\mathrm{.}06$ percent

$6\mathrm{.}35$ percent

$7\mathrm{.}22$ percent