WACC COMPREHENSIVE: A company has a

$700

million par value bond issue outstanding with 6 years to maturity. The bond pays a coupon of

7.15%

per year, semiannually, and the issue's market value is

$663

million. The company also has a

$120

million par value bond issue outstanding with four years to maturity. That bond pays a coupon of

6%

per year, semiannually, and the market value is

$110

million. The company's tax rate is

40%

. The common stock trades for

$89

per share and there are fifteen million shares outstanding. The risk-free interest rate is

4.1%

per year and the stock's beta is 1.2. The stock's next annual dividend is expected to be

$7

per share and the dividend is expected to grow forever at a constant rate of

5.3%

per year. What is the company's weighted average cost of capital?

WACC COMPREHENSIVE: A company has a $700 million par value bond issue outstanding with 6 years to maturity. The bond pays a coupon of 7.15% per year, semiannually, and the issue's market value is $663 million. The company also has a $120 million par value bond issue outstanding with four years to maturity. That bond pays a coupon of 6% per year, semiannually, and the market value is $110 million. The company's tax rate is 40%. The common stock trades for $89 per share and there are fifteen million shares outstanding. The risk-free interest rate is 4.1% per year and the stock's beta is 1.2. The stock's next annual dividend is expected to be $7 per share and the dividend is expected to grow forever at a constant rate of 5.3% per year. What is the company's weighted average cost of capital