Question: The expected return on the market is 1 2 . 3 6 % , the risk - free rate is 4 . 8 8 %

The expected return on the market is 12.36%, the risk-free rate is 4.88%, and the tax rate is 18.00%. Semper Fun Sports has 310,000 common shares outstanding that are priced at $40.20 per share and have an expected return of 16.96% and an expected real return of 14.62%. Last year, Semper Fun Sports common stock had a return of 11.66%. The company also has 411,000 shares of preferred stock outstanding that are priced at $15.50 per share and have an expected return of 13.36% and an expected real return of 11.81%. Last year, Semper Fun Sports preferred stock had a return of 13.36%. Finally, the company has 10,000 bonds outstanding with a coupon rate of 9.69%, yield-to-maturity of 4.70%, current yield of 8.44%, face value of $1,000.00, and price of $1,260.00. What is the weighted average cost of capital for Semper Fun Sports?
9.73%(plus or minus 0.02 percent)
11.32%(plus or minus 0.02 percent)
12.21%(plus or minus 0.02 percent)
10.98%(plus or minus 0.02 percent)
None of the above is within .02 percentage points of the correct answer
 The expected return on the market is 12.36%, the risk-free rate

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