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A financial analyst at buckco ltd wants to compute the

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A financial analyst at Buckco Ltd. wants to compute the company's weighted average cost of capital (WACC) using the dividend discount model. The analyst has gathered the following data:

Before-tax cost of new debt

8%

Tax rate

40%

Target debt-to-equity ratio

0.8033

Stock price

$30

Next year's dividend

$1.50

Estimated growth rate

7%

Buckco's WACC is closest to:

A. 8%.

B. 9%.

C. 12%.

Reference no: EM13575980

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