Finally There! Has 1,600 Bonds Outstanding with a $1,000 Par

question 57

Multiple Choice

Finally There! has 1,600 bonds outstanding with a $1,000 par value,a 6 percent coupon,8 years to maturity,semiannual interest payments,and a market price equal to 97 percent of par.The firm also has 60,000 shares of common stock outstanding at a price per share of $32 and a beta of 1.15.The risk-free rate is 5 percent,the market risk premium is 7 percent,and the tax rate is 35 percent.What is the firm's WACC? (When computing WACC,round your cost of debt to 4 decimal places when expressed as a decimal value. )

• A)9.58%
• B)10.34%
• C)9.10%
• D)9.19%
• E)10.12%

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Definitions:

μ

The symbol commonly used to represent the mean or average of a population in statistics.

Simple Random Sample

A segment of a statistical population in which every individual posseses the same likelihood of being selected.

Normal Population

A statistical population that follows a normal distribution, where the data tends to cluster around a mean value.

Population Mean

The average value of a set of characteristics within a specified entire population.