question #44

The market value of Fords' equity, preferred stock, and debt are $7 billion, $1 billion, and $12 billion, respectively. Ford has a beta of 1.5, the market risk premium is 6%, and the risk-free rate of interest is 5%. Ford's preferred stock pays a dividend of $4 each year and trades at a price of $25 per share. Ford's debt trades with a yield to maturity of 8%. What is Ford's weighted average cost of capital if its tax rate is 35%? A. 8.82% OB. 9.7% O c. 9.26% OD. 10.58%