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What is the company WACC

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Question - Smothers Brothers Ltd. is estimating its WACC. The company has collected the following information:

Its capital structure (in market value terms) consists of 40 percent debt (i.e. D/(E+D) = 0.4) and 60 percent common equity.

The company has 20-year bonds outstanding with a 10.7% annual coupon that are trading at par.

The company's tax rate is 35%.

The risk-free rate is 3.5%.

The market risk premium is 5%.

The stock's beta is 1.

Required - What is the company's WACC?

Reference no: EM132921353

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