WAC

A 10%, $1,000 par value, annually dividend, perpetual preferred stock sells for $1,111. Both an existing common stock and a new common stock issue, which incurs no flotation cost of the proceeds, sells for $50. D, = $4.3995 and g = 5%. b = 1.2; Pre = 7%; RPM = 6%. Bond-Yield Risk Premium (RP)= 4%. Target capital structure: 30% debt, 20% preferred, 50% common equity. Tax rate is 40%. Select one: O a. 9% b. 10.60% b. 10.60% O c. 14.2% d. 14.0% e. 10.00%