What is the WACC for the following firm? Debt: 50,000 bonds with a 5.4 percent coupon, a par value of $1,000, a current price quote of 112.32 with 11 years to maturity. 40,000 bonds with a 5.1 percent coupon, a par value of $2,000, a current price quote of 105.35 with 25 years to maturity. Both bonds make semiannual coupon payments. Common Stock: 3,600,000 shares of common stock with a price of $81 and a beta of 1.1. The company expects to pay a dividend of $4.85 next year and the dividends will grow at 4.2 percent forever, Market: The corporate tax rate is 21 percent, the market risk premium is 7.5 percent, and the risk-free rate is 3.5 percent. Debt: Number of bonds Par value ($) Coupon rate Par value (% of par) Quoted price Settlement date Maturity date Coupons per year Bond A 50,000 1,000 $ 5.40% 100 112.320 1/1/20 1/1/31 2 Bond B 40,000 2,000 5.10% 100 105.350 1/1/20 1/1/45 2 S Common stock Number of shares Price Beta Dividend next year Dividend growth rate 3,600,000 81 1.10 4.85 4.2% S Market Market risk premium Risk-free rate Tax rate 7.5% 3.5% 21% What is the WACC for the following firm? Debt: 50,000 bonds with a 5.4 percent coupon, a par value of $1,000, a current price quote of 112.32 with 11 years to maturity. 40,000 bonds with a 5.1 percent coupon, a par value of $2,000, a current price quote of 105.35 with 25 years to maturity. Both bonds make semiannual coupon payments. Common Stock: 3,600,000 shares of common stock with a price of $81 and a beta of 1.1. The company expects to pay a dividend of $4.85 next year and the dividends will grow at 4.2 percent forever, Market: The corporate tax rate is 21 percent, the market risk premium is 7.5 percent, and the risk-free rate is 3.5 percent. Debt: Number of bonds Par value ($) Coupon rate Par value (% of par) Quoted price Settlement date Maturity date Coupons per year Bond A 50,000 1,000 $ 5.40% 100 112.320 1/1/20 1/1/31 2 Bond B 40,000 2,000 5.10% 100 105.350 1/1/20 1/1/45 2 S Common stock Number of shares Price Beta Dividend next year Dividend growth rate 3,600,000 81 1.10 4.85 4.2% S Market Market risk premium Risk-free rate Tax rate 7.5% 3.5% 21%