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Tiger Industries can borrow funds at a 7 percent interest rate. Its preferred stock sells for $40 per share and pays an annual dividend of
Tiger Industries can borrow funds at a 7 percent interest rate. Its preferred stock sells for $40 per share and pays an annual dividend of $4 per share. The company has a beta of 1.9, risk-free investments currently pay 4 percent. The company pays taxes at a 40 percent rate. The required rate of return for an average stock is 9 percent. Tiger's Target Capital structure consists of 10 percent preferred stock, 60 percent debt, and all remaining funds comes from common stock. What is Tigers WACC?
a. 3.52%
b. 4.19%
c. 9.85%
d. 7.57%
e. 9.25%
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