Question

The current stock price for a company is $31 per share, and there are 7 million shares outstanding. The beta for this firms stock is 0.9, the risk-free rate is 4.7, and the expected market risk premium is 6.4%. This firm also has 60,000 bonds outstanding, which pay interest semiannually. These bonds have a coupon interest rate of 7%, 9 years to maturity, a face value of $1,000, and an annual yield to maturity of 6.5%. If the corporate tax rate is 37%, what is the Weighted Average Cost of Capital (WACC) for this firm? (Answer to the nearest hundredth of a percent, but do not use a percent sign).

Answer 1