Question: Pfizer Inc. has 10,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7 percent coupon, pay interest semiannually, and

Pfizer Inc. has 10,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7 percent coupon, pay interest semiannually, and mature in 7.5 years? The bonds are selling at 98 percent of face value. The firm also has 250,000 shares of common stock outstanding at a market price of $15 a share. Next year's annual dividend is expected to be $1.55 a share. The dividend growth rate is 2 percent. The company's tax rate is 34 percent. What is the firm's weighted average cost of capital?

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