Question

You are given the following information on Parrothead Enterprises:
Debt:	9,000 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 108. These bonds pay interest semiannually and have a par value of $2,000.
Common stock:	305,000 shares of common stock selling for $66.10 per share. The stock has a beta of 1.06 and will pay a dividend of $4.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely.
Preferred stock:	9,600 shares of 4.55 percent preferred stock selling at $95.60 per share. The par value is $100 per share.
Market:	10.4 percent expected return, risk-free rate of 4.4 percent, and a 21 percent tax rate.

Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1