QUESTIONS 69 THROUGH 78 RELATE TO CORPORATE FINANCE

75. The following information is available for a company: • Bonds are priced at par and they have an annual coupon rate of 9.2% • Preferred stock is priced at $8.18 and it pays an annual dividend of $1.35 • Common equity has a beta of 1.3 • The risk-free rate is 4% and the market premium is 11% • Capital structure: Debt = 30%; Preferred stock = 15%; Common equity = 55% • The tax rate is 35% The weighted average cost of capital (WACC) for the company is closest to: A. 11.5%. B. 13.4%. C. 14.3%.