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The market value of Ford’s debt, preferred stock and equity are $1.5 billion, $1 billion, and...

  1. The market value of Ford’s debt, preferred stock and equity are $1.5 billion, $1 billion, and $6 billion, respectively. Ford has a beta of 1.5, the market risk premium is 8%, and the risk-free rate of interest is 4%. Ford’s preferred stock pays a dividend of $3.50 each year and trades at a price of $30 per share. Ford’s debt trades with a yield to maturity of 9.5%. What is Ford’s WACC if its tax rate is 21%?

    13.27%

    13.99%

    13.62%

    14.12%
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