7. WACC. Look at the following book-value balance sheet for University Products Inc. The pre- ferred stock currently sells for $15 per share and pays a dividend of $2 a share. The common stock sells for $20 per share and has a beta of.8. There are 1 million common shares outstanding. The market risk premium is 10%, the risk-free rate is 6%, and the firm's tax rate is 40%. (LO13-1) BOOK-VALUE BALANCE SHEET (Figures in $ millions) Assets Liabilities and Net Worth Cash and short-term securities $ 1 Bonds, coupon = 8%, paid annually (maturity = 10 years, current yield to maturity = 9%) Accounts receivable 3 Preferred stock (par value $20 per share) Inventories 7 Common stock (par value $.10) Plant and equipment 21 Additional paid-in stockholders' equity Retained earnings Total $32 $10 0.1 9.9 10 $32 a. What is the market debt-to-value ratio of the firm? b. What is University's WACC