Find the WACC. Possible multiple choice answers (please, please, please, don\'t

Question

Find the WACC.

Possible multiple choice answers (please, please, please, don't just do a simple WACC table, show how you developed the cost of debt, developed values from the bond info, etc, this is so important to show your work so I know how to do it!):

WACC=8.89%

WACC=8.45%

WACC=9.37%

Tax rate 35 percent Debt: Bonds outstanding: 6000 Coupon on bonds: 4 percent Par value of bonds: $1000 Bonds selling at what percent of par: 105 Bonds make coupon payments: semi-annually Years to maturity of bonds 25 Common Stock: Shares Outstanding: 185,000 Current price/share: $58.00 Beta: 1.10 Market Information: Risk premium: 7 percent Risk-free rate 5 percent

Explanation / Answer

Cost MV Percentage Debt 1.85%      6,300,000.00 37% Preferred 0.00% 0% Equity 13%    10,730,000.00 63%    17,030,000.00 Tax 35% WACC 8.45%

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