Alto and Tenor have 15,000 shares of stock outstanding at a market price of $21 per share.The firm also has $140,000 of 6 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 14.7 percent.What is the value of R_WACC? A)12.02% B)7.38% C)10.83% D)8.64% E)11.09%

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S = 15,000 × $21 = $315,000B + S = $140,000 + 315,000 = $455,000R_WACC = ($315,000/$455,000)× .147 + ($140,000/$455,000)× .06 = .1202,or 12.02%

Alto and Tenor Have 15,000 Shares of Stock Outstanding at a Market