Telco Corp. has $350,000 in debt, $700,000 in common equity and $250,000 in preferred stock in its capital structure. The cost of debt is 6.50%, the cost of preferred stock is 6.00%, the cost of common equity is 11.25%, and the tax rate is 40%. What is Telco's WACC?
Hint: You need to first calculate the weights of debt, common equity and preferred equity.
8.26%
9.48%
9.17%
9.54%
7.82%