Problem
The following information relates to TOE Corporation (TOE):
The market risk premium is 12.3% p.a.. the risk-free rate is 5% pa, and the company tax rate is 30%. The market yield on the TOE preference shares is 150% per annum. The company's bonds have a total market value of $4,000,000, have a coupon rate of 5% pa, and current yield to maturity is 6.5% per annum. TOE has 350,000 preference shares trading at $4 each. TOE has 6 million ordinary shares outstanding that are currently priced at $2 each and have a beta of 1.25.
What is TOE Corporation's WACC?