A company has outstanding $100 million worth of common stock on which investors require a return of 15%. In addition, the firm has outstanding $50 million in bonds that offer 9% return. What rate of return must the firm earn on its investment to satisfy both groups of investors if the corporate tax rate is one-third. (Hint: find WACC)
a) 9.33%
b)12,00%
c)13.25%
d)14.00%
e) None of the above