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WACC calculation 2. Assume that you are on the financial staff of Ehrhorn Enterprises, and you have collected the following data: (1) The yield to

WACC calculation

2. Assume that you are on the financial staff of Ehrhorn Enterprises, and you have collected the following data: (1) The yield to maturity on the companys outstanding 7% annual coupon bonds is 5%, and its tax rate is 25%. (2) The risk-free rate is 2%, the market risk premium (rM rRF) is 5%, and the firms beta is 0.90. (3) The firms capital structure consists of 35% debt and 65% equity. What is Ehrhorns WACC?

a. 5.2500%

b. 5.5375%

c. 6.0625%

d. 6.5000%

e. 6.8750%

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