11 days ago

Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 7.5%. T

he company also has 750,000 shares of 7% preferred stock and 2.5 million shares of common stock outstanding. The preferred stock sells for $65 a share. The common stock has a beta of 1.34 and sells for $42 a share. The cost of equity is 14.06%. The corporate tax rate is 38%.
What is the firm's weighted average cost of capital?
a. 10.15%
b. 10.64%
c. 11.18%
d. 1.30%

Business

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