Johnny Cake Ltd

Multiple Choice

Johnny Cake Ltd. has 10 million shares of stock outstanding selling at $20 per share and an issue of $50 million in 5.12 percent, annual coupon bonds with a maturity of 13 years, selling at 93.5 percent of par ($1,000) . If Johnny Cake's weighted average tax rate is 21 percent, its next dividend is expected to be $2.00 per share, and all future dividends are expected to grow at 5 percent per year, indefinitely, what is its WACC?

A) 12.64 percent
B) 13.27 percent
C) 13.03 percent
D) 14.06 percent