Rekall Inc., the memory implant company, has 7 million shares of common stock outstanding and 100,000 semi-annual bonds. The bonds have 6 years to maturity, a 9.05% coupon rate and a face value of $1,000 each
The common stock currently sells for $29.94 and just paid a dividend of $2.50. Dividends are paid annually and are expected to grow in perpetuity at 3%. The bonds sell for 94% of face value and have a 10.42% yield to maturity. The after-tax cost of debt is 7.294%, and the cost of equity is 11.6%. What is Rekall's WACC?
A) 7.09%
B) 9.51%
C) 9.94%
D) 10.27%
E) 11.24%
D
You might also like to view...
Locking petty cash in a safe is an example of __________________________
Fill in the blank(s) with correct word
Writing negative news with sensitivity and clarity helps the reader do what?
A) Understand the message B) Accept the message C) Increase their desire to improve D) Take the message personally E) Respond to the message appropriately
Which of the following describes an electronic test market?
A) It is one in which the firm tests the product or marketing-mix variables through the company's normal distribution channels. B) It is conducted by outside research firms that guarantee distribution of the product through prespecified types and numbers of distributors. C) It includes a panel of consumers that has agreed to carry identification cards that each consumer presents when buying goods and services. D) A limited amount of data on consumer response to a new product is fed into a model containing certain assumptions regarding planned marketing programs, which generates likely product sales volume. E) none of the above
The Dividends account is normally closed by debiting it.
Answer the following statement true (T) or false (F)