Judson enterprises has a capital structure (based on market values) consisting of 40% debt, 10% preferred stock, and 50% common equity. Judson's long-term bonds have a before-tax YTM of 9%, its cost of preferred stock is 7.9%, and its cost of retained earnings is 12.5% if Judson's tax rate is 40%, what is its WACC?
- 8.54%
- 8.38%
- 9.20%
- 9.64%
- 8.75%