Question: SE ISSA Tshilombo Mundimbu has a capital structure that consists of 40% common stock and 60% long-term debt. He calls his political ally, Djenga Yanfu

SE ISSA Tshilombo Mundimbu has a capital structure that consists of 40% common stock and 60% long-term debt. He calls his political ally, Djenga Yanfu Tshisekedi to help him calculate his WACC. Djenga has accumulated the following information:

The company currently has 15-year, 8% annual coupon bonds that have a face value of $1,000 and sell for $1,075. The risk-free rate is 5%. The market risk premium is 4%. The beta on Clarks common stock is 1.1. The companys retained earnings are sufficient so that they do not have to issue any new common stock to fund capital projects. The companys tax rate is 43%. Given this information, what is ISSAs WACC?

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