Consider the following: the market value of Luke-I-am-your-father stock is $60 a share (with 2,000,000 shares outstanding and the next annual dividend is expected to be $1.50) ,the bonds are currently selling for $1050 (semi-annual coupon payments of $45; maturing in 20 years; 10,000 bonds in the market) ,the preferred stock currently is $10 per share (paying dividends of $.50 in perpetuity,100,000 shares outstanding) ; if the tax rate is 40%,what is the firm's WACC?
A) 2.50%
B) 3.00%
C) 5.33%
D) 2.73%
Correct Answer:
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