Question 1: Suppose that XYZs common stock has a cost of 12% and its preferred stock has a cost of 11.5%. The risk-free rate is 2.5%. The yield to maturity for the firms current outstanding bonds is 5.60%. The companys total value of equity (common stock) is $65 million dollars, its total value of preferred stock is $15 million, and its total value of debt (bonds) is $29 million dollars. What is the weighted average cost of capital (WACC) if the tax rate is 34 percent?

1. 9.70%
2. 5.69%
3. 9.72%
4. 10.23%