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Wilson's has 10,000 shares of common stock outstanding at a market price of $35 a share. The firm also has a bond issue outstanding with
Wilson's has 10,000 shares of common stock outstanding at a market price of $35 a share. The firm also has a bond issue outstanding with a total face value of $250,000 which is selling for 102 % of face value. The cost of equity is 11 % while the pre-tax cost of debt is 8 %. The firm has a beta of 1.1 and a tax rate of 34 %. What is Wilson's weighted average cost of capital?
Question 15 options:
| 6.50 % |
| 8.72 % |
| 9.08 % |
| 9.63 % |
| None of the above |
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