12-5 Unbelievable Deals Inc. has the following capital structure and marginal tax rate of 35%. What is its WACC? Debt: 100,000 coupon bonds Eight-year maturity Face value of $1,000 Semi-annual coupon...

Unbelievable Deals Inc. has the following capital structure and marginal tax rate of 35%. What is its WACC?

Debt:

• 100,000 coupon bonds


• Eight-year maturity


• Face value of $1,000


• Semi-annual coupon rate of 9%


• Bond price of $1,075

Common shares:

• Risk-free rate = 5%


• Expected market risk premium = 7%


• Beta = 1.2


• Number of common shares = 3,000,000


• Common share price = $30

Preferred shares:

• Par value = $150


• Dividends = $12


• Share price = $95


• Number of preferred shares = 100,000