Daniel's Sound Systems Has 210,000 Shares of Common Stock Outstanding

question 13

Multiple Choice

Daniel's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month,Daniel's paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4%. Daniel's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7% coupon,pay interest annually,and mature in 4.89 years. The bonds are selling at 99% of face value. The company's tax rate is 34%. What is Daniel's weighted average cost of capital?

• A) 5.3%
• B) 5.8%
• C) 6.3%
• D) 6.9%
• E) 7.2%

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Definitions:

Rawlsian

Pertaining to the philosophical and ethical framework proposed by John Rawls, focusing on justice as fairness and the distribution of resources.

Economic Policy

Refers to the actions that governments take in the economic field, including taxation, government spending, and the regulation of the economy.

Economic Status

The level of economic wealth, or prosperity, achieved by an individual, group, or country, often measured by income, wealth, and employment.

Technological Change

Refers to the process by which new technologies are developed and introduced, leading to improvements in productivity, efficiency, or quality in goods and services.