Business, 06.05.2021 16:40 netflixacc0107

Clark Communications has a capital structure that consists of 70 percent common stock and 30 percent long-term debt. In order to calculate Clarks’s weighted average cost of capital, an analyst has accumulated the following information: · The company currently has 15-year bonds outstanding with annual coupon payments of 8 percent. The bonds have a face value of $1,000 and sell for $1,075. · The risk-free rate is 5 percent. · The market risk premium is 4 percent. · The beta on Clark's common stock is 1.1. · The company's retained earnings are sufficient so that they do not have to issue any new common stock to fund capital projects. · The company's tax rate is 38 percent. Given this information, what is Clark's WACC? A. 8.73% B. 8.07% C. 7.91% D. 7.40% E. 5.93%

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