SCENARIO 10-6Viduka Construction's CFO has collected the following information to estimate the company's WACC:

The company currently has 20-year, 8.5% annual coupon bonds that have a face value of $1,000 and sell for $945.

The company's stock has a beta nar018-1.jpg 1.20.

The market risk premium, RPm , equals 5%. The risk-free rate is 6%.

The company has outstanding preferred stock that pays a $2.00 annual dividend. The preferred stock sells for $25 a share.

The company's tax rate is 40%.

The company's capital structure consists of 40% long-term debt, 40% common stock, and 20% preferred stock.

What is the company's WACC?

7.95%

8.12%

8.59%

8.67%

10.04%