QUESTION $19$

The expected retum on the market is $12\mathrm{.}12\%,$ the risk$-$free rate is $4\mathrm{.}20\%,$ and the tax rate is $20\mathrm{.}00\%.$ Semper Fun Sports has $297,000$ common shares outstanding that are priced at $$42\mathrm{.}20$ per share and have an expected return of $17\mathrm{.}14\%$ and an expected real return of $14\mathrm{.}44\%.$ Last year, Semper Fun Sports common stock had a return of $11\mathrm{.}428.$ The company also has $405,000$ shares of preferred stock outstanding that are priced at $$15\mathrm{.}94$ per share and have an expected return of $13\mathrm{.}38\%$ and an expected real return of $11\mathrm{.}13\%.$ Last year, Semper Fun Sports preferred stock had a return of $13\mathrm{.}38\%.$ Finally, the company has $10,000$ bonds outstanding with a coupon rate of $9\mathrm{.}37\%,$ yield$-$to$-$maturity of $4\mathrm{.}38\%,$ current yield of $8\mathrm{.}84\%,$ face value of $$1,000\mathrm{.}00,$ and price of $$1,260\mathrm{.}00.$ What is the weighted average cost of capital for Semper Fun Sports?

$11\mathrm{.}28\%($plus or minus $0\mathrm{.}02$ percent$)$

$9\mathrm{.}40\%($plus or minus $0\mathrm{.}02$ percent$)$

$10\mathrm{.}93\%($plus or minus $0\mathrm{.}02$ percent$)$

$12\mathrm{.}36\%($plus or minus $0\mathrm{.}02$ percent$)$

None of the above is within $\mathrm{.}02$ percentage points of the correct answer