Question 13 (1 point)

Assume that you are on the financial staff of Michelson Inc., and you have collected the following data: The yield on the companys outstanding bonds is 8.00%, and its tax rate is 40%. The next expected dividend is $0.65 a share, and the dividend is expected to grow at a constant rate of 6.00% a year. The price of Michelsons stock is $17.50 per share, and the flotation cost for selling new shares is F = 10%. The target capital structure is 45% debt and the balance is common equity. What is Michelsons WACC, assuming it must issue new stock to finance its capital budget?

Question 13 options:

	7.73%
	6.98%
	7.34%
	6.63%