Question: Problem Solving: Given the following information, what is the WACC? Common Stock: Bonds: 1 million shares outstanding, $40 per share, $1 par value, beta =

Problem Solving: Given the following information, what is the WACC?

Common Stock: Bonds: 1 million shares outstanding, $40 per share, $1 par value, beta = 1.3

10,000 bonds outstanding, $1,000 face value each, 8% annual coupon, 22 years to maturity, market price = $1,101.23 per bond

Market risk Premium = 8.6 %, risk-free rate = 4.5%, marginal tax rate = 34%

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