Consider the Following: the Market Value of Louis Stock Is

question 78

Multiple Choice

Consider the following: the market value of Louis stock is $15 a share (with 5,000,000 shares outstanding and the next annual dividend is expected to be $1.25) ,the bonds are currently selling for $920 (semi-annual coupon payments of $30; maturing in 20 years; 200,000 bonds in the market) ,the preferred stock currently is $25 per share (paying dividends of $3 in perpetuity,100,000 shares outstanding) ; if the tax rate is 40%,what is the firm's WACC?

• A) 6.81%
• B) 7.26%
• C) 9.07%
• D) 7.81%

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