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QUESTION $8$

Estimate this firm's WACC:

$15$ points

Debt

Number of bonds outstanding $=10,000$

price per bond $=$$$1,165$

par value per bond $=$$$1,000$

coupon rate $=6\%($paid annually$)$

Years to maturity $=10$

Common Stock

Number of shares outstanding $=1,000,000$

Price per share $=$$$25$

Book value per share $=$$$15$

Beta $=1\mathrm{.}4$

Risk free rate $=4\mathrm{.}5\%$

Market risk premium $=5\%$

Corporate tax rate $=35\%$

a$.7\mathrm{.}93\%$

b$.8\mathrm{.}49\%$

c$.9\mathrm{.}11\%$

d$.9\mathrm{.}42\%$

e$.8\mathrm{.}66\%$