Consider the following capital structure for Sea Shore Corporation. The company has a publicly-traded bond issue, preferred...

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Finance

Consider the following capital structure for Sea ShoreCorporation. The company has a publicly-traded bond issue,preferred shares, and common equity in its capital structure. Thefirm’s tax rate is 35%. The risk-free rate is 7%.
Details on the components of the capital structure are listedbelow.
Debt: Fixed coupon-paying bond issue
$80 million par
6% semiannual coupon
Remaining maturity of 10 years
Currently priced in market at 105% of par value
Preferred equity: $100 million par
6% annual coupon
Each $1,000 par issue is currently priced at $925.
Common equity: 10 million shares outstanding
Current share price: $40
Stock beta: 0.5
Market risk premium = 10%
Sea Shore’s weighted average cost of capital (wacc) isclosest to:
A) 7.62%
B) 8.51%
C) 9.87%
D) 10.14%

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Consider the following capital structure for Sea ShoreCorporation. The company has a publicly-traded bond issue,preferred shares, and common equity in its capital structure. Thefirm’s tax rate is 35%. The risk-free rate is 7%.Details on the components of the capital structure are listedbelow.Debt:Fixed coupon-paying bond issue$80 million par6% semiannual couponRemaining maturity of 10 yearsCurrently priced in market at 105% of par valuePreferred equity:$100 million par6% annual couponEach $1,000 par issue is currently priced at $925.Common equity:10 million shares outstandingCurrent share price: $40Stock beta: 0.5Market risk premium = 10%Sea Shore’s weighted average cost of capital (wacc) isclosest to:A) 7.62%B) 8.51%C) 9.87%D) 10.14%

Debt:	Fixed coupon-paying bond issue
	$80 million par
	6% semiannual coupon
	Remaining maturity of 10 years
	Currently priced in market at 105% of par value

Preferred equity:	$100 million par
	6% annual coupon
	Each $1,000 par issue is currently priced at $925.

Common equity:	10 million shares outstanding
	Current share price: $40
	Stock beta: 0.5
	Market risk premium = 10%