Firm Z has outstanding bonds with a 8% yield to maturity. The firm's managers believe that they can raise new debt at a similar rate. The firm's tax-rate is 30%. Also, the firm's beta is 1.5. the return on the market is 9% and the risk-free rate is 3%. If the firm's target capital structure is evenly split between debt and common equity but no preferred stock, what is the firm's weighted average cost of capital (WACC)? A) 5.45% B) 6.20% C) 7.70% D) 8.80% E) 9.55% Previous Page Next Page Page 17 of 36