Ruby Brothers is estimating its WACC. The company has collected the following information:
Its capital structure consists of 10,000 bonds with a face value of $1,000 and a term to maturity of 12 years; and ordinary shares outstanding of 10 million shares and were issued with a par value of 43c.
The bonds have 18 years to maturity and have a 9.3 percent annual coupon rate (coupon payments made annually)
The current market price of the shares is $1.50.
The company’s tax rate is 35 percent.
The risk-free rate is 5.2 percent.
The market risk premium is 5.5 percent.
The stock’s beta is 1.4.
What is the company’s weighted average cost of capital?