Hilliard Corp

Multiple Choice

Hilliard Corp. wants to calculate its weighted average cost of capital (WACC) • The company's long-term bonds currently offer a yield to maturity of 8 percent. • The company's stock price is $32 per share (P0 = $32) • The company recently paid a dividend of $2 per share (D0 = $2.00) • The dividend is expected to grow at a constant rate of 6 percent a year (g = 6%) • The company pays a 10 percent flotation cost whenever it issues new common stock (F = 10%) • The company's target capital structure is 75 percent equity and 25 percent debt.
• The company's tax rate is 40 percent.
• The company anticipates issuing new common stock during the upcoming year.
What is the company's WACC?

A) 10.67%
B) 11.22%
C) 11.47%
D) 12.02%
E) 12.56%