Scott's company has 1 million shares of stock outstanding. The stock currently sells for $10 per share. It issued 10,000 10-year bonds 3 years ago (Note the "10,000" is number of bonds, not the total value). Each bond has a coupon rate of 8% and pays coupon semiannually. The most recent price was quoted at 98:12. Also, the company has a preferred stock that is worth 5 million with an annual dividend of $0.70 and a price of $10. The risk-free rate is 8 percent, and the market risk premium is 7 percent. You've estimated that Scott's company has a beta of 1.2. If the corporate tax rate is 34 percent, what is the WACC of Scott's company? 07.51% 8.64% 10.18% 12.03% 6.77% Question 6 (10 points) Firm XYZ, is debating whether to convert its all-equity capital structure to one that has 40 percent debt. Currently, there are 10,000 shares outstanding, and the price per share is $10. EBIT is expected to remain at $16,000 per year forever. The interest rate on new debt is 10 percent, and there are no taxes. Calculate the break- even EBIT so that the EPS is the same under the two capital structures. 6,000 7,500 1,000 5,000 2,500