You Are Given the Following Information Concerning Around Town Tours

question 39

Multiple Choice

You are given the following information concerning Around Town Tours:
Debt:
8,500,7.1 percent coupon bonds outstanding,with 14 years to maturity and a quoted price of 102.6.These bonds pay interest semiannually.
Common stock:
265,000 shares of common stock selling for $76 per share.The stock has a beta of 0.92 and will pay a dividend of $2.48 next year.The dividend is expected to grow by 4 percent per year indefinitely.
Preferred stock:
7,500 shares of 6 percent preferred stock selling at $88 per share.
Market:
A 13.2 percent expected return,a 4.5 percent risk-free rate,and a 34 percent tax rate.
Calculate the WACC for this firm.

• A)8.22 percent
• B)8.67 percent
• C)9.29 percent
• D)9.57 percent
• E)10.08 percent

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Definitions:

Vascular Tissue

Specialized tissue in plants that is responsible for the transport of water and nutrients throughout the plant body.

Ground Tissue

Plant tissue that makes up the bulk of the plant body, involved in photosynthesis, storage, and support, excluding the vascular and dermal tissues.

Dermal Tissue

Dermal tissue is a protective outer layer of cells in plants, equivalent to skin in animals, that serves as the first defense barrier against the environment.

Mesophyll Tissue

The inner tissue of a leaf, containing many chloroplasts where photosynthesis takes place.