What is wacc for loran chalices inc

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Problem 1: Loran Chalices Inc. hired you as a consultant to estimate the company's WACC. You have obtained the following information. (1) The company's noncallable bonds mature in 20 years, have a coupon rate of 7.00% paid annually, a par value of $1,000, and a current market price of $875. (2) The company's tax rate is 25%. (3) The required rate of return on the company's common stock based on CAPM is 10.3%. (4) The target capital structure consists of 45% debt, with the remainder comprised of common equity. What is its WACC?

Group of answer choices

Option 1: 6.60%

Option 2: 7.62%

Option 3: 8.47%

Option 4: 8.06%

Option 5: 9.40%

Reference no: EM132758574

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