Alto and Tenor have 17,400 shares of stock outstanding at a market price of $27 per share.The firm also has $140,000 of 6.2 percent bonds outstanding that are selling at par.The firm does not expect to pay taxes for the foreseeable future.The cost of equity is 15.3 percent.What is the value of R_WACC? A)13.21% B)17.38% C)10.83% D)14.64% E)11.09%

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The WACC (Weighted Average Cost of Capital) is calculated using the formula: WACC = (E/V) * Re + (D/V) * Rd * (1-Tc), where E is the market value of equity, V is the total value of equity and debt, Re is the cost of equity, D is the market value of debt, Rd is the cost of debt, and Tc is the tax rate. Since there are no taxes, Tc = 0. The market value of equity (E) is 17,400 shares * $27 = $469,800. The market value of debt (D) is $140,000. The total value (V) is $469,800 + $140,000 = $609,800. The WACC is then (469,800/609,800) * 15.3% + (140,000/609,800) * 6.2% = 13.21%.

Alto and Tenor Have 17,400 Shares of Stock Outstanding at a Market