Given the Following Information for Groto Corp

question 14

Multiple Choice

Given the following information for Groto Corp. find the WACC. Assume the company's tax rate is 30%. Bonds: 10,000 9% coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling
For 98% of par; the bonds make semi-annual payments. Common shares: 300,000 shares
Outstanding, selling for $40 per share; the beta is 0.95. Preferred shares: 55,000 shares of 6%
Preferred stock outstanding, currently selling for $100 per share. 10% market risk premium and 3%
Risk-free rate.

• A) 13.32%
• B) 12.32%
• C) 11.22%
• D) 10.12%
• E) 9.02%

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Definitions:

F-ratio

A statistic calculated in analysis of variance (ANOVA) tests, comparing the variability between group means to the variability within groups.

Numerator

The top number in a fraction that indicates how many parts of the whole or collection are being considered.

Denominator

The bottom part of a fraction that indicates the total number of equal parts the whole is divided into.