Viduka Construction's CFO has collected the following information to estimate the company's WACC:
· The company currently has 20-year, 8.5% annual coupon bonds that have a face value of $1,000 and sell for $945.
· The company's stock has a beta nar018-1.jpg 1.20.
· The market risk premium, RPm , equals 5%.
· The risk-free rate is 6%.
· The company has outstanding preferred stock that pays a $2.00 annual dividend. The preferred stock sells for $25 a share.
· The company's tax rate is 40%.
· The company's capital structure consists of 40% long-term debt, 40% common stock, and 20% preferred stock.
What is the company's WACC?
7.95%
8.12%
8.59%
8.67%
10.04%