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Delta, Inc. has 10 million shares of common stock outstanding and 120,000 bonds with an 8%,...

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Finance

Delta, Inc. has 10 million shares of common stock outstandingand 120,000 bonds with an 8%, semiannually payable coupon rate anda par value of $1,000 each. The common stock currently sells for$40 per share and has a beta of 1.25. The bonds have 10 yearsremaining to maturity and sell for 90% of par value. The risk-freerate is 4%, the market risk premium is 8%, and the tax rate is 35%.Using this information, compute the weighted average cost ofcapital (WACC) for Delta, Inc.

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