Given the following information, what is WBM Corporation's WACC?
Common Stock: 1 million shares outstanding, $40 per share, $1 par value, beta = 1.3
Bonds: 10,000 bonds outstanding, $1,000 face value each, 8% annual coupon, 22 years to maturity, market price = $1,101.23 per bond
Market risk premium = 8. 6%, risk-free rate = 4. 5%, marginal tax rate = 34%
A) 7.89%
B) 9.90%
C) 12.19%
D) 13.30%
E) 15.78%
Correct Answer:
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