Golden Eagle has 1,250 bonds outstanding with a market value of $980 each.The pretax cost of debt is 7.2 percent.The firm also has 46,000 shares of common stock outstanding at a price per share of $32 and a beta of 1.21.The risk-free rate is 2.4 percent,the market risk premium is 7.3 percent,and the tax rate is 34 percent.What is the company's WACC?

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The WACC 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 market value of the firm's financing (equity + 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. The cost of equity (Re) is calculated using the CAPM formula: Re = risk-free rate + beta * market risk premium. Plugging in the values: Re = 2.4% + 1.21 * 7.3% = 11.233%. The market value of equity (E) is 46,000 * $32 = $1,472,000. The market value of debt (D) is 1,250 * $980 = $1,225,000. The total value (V) is $1,472,000 + $1,225,000 = $2,697,000. The after-tax cost of debt is 7.2% * (1 - 0.34) = 4.752%. Therefore, WACC = ($1,472,000/$2,697,000 * 11.233%) + ($1,225,000/$2,697,000 * 4.752%) = 10.09%.

Golden Eagle Has 1,250 Bonds Outstanding with a Market Value