XYZ Industries Has 10 Million Shares of Stock Outstanding Selling

Multiple Choice

XYZ Industries has 10 million shares of stock outstanding selling at $10 per share and an issue of $30 million in 8.5 percent, annual coupon bonds with a maturity of 25 years, selling at 102 percent of par ($1,000) . If XYZ's weighted average tax rate is 40 percent and its cost of equity is 15 percent, what is XYZ's WACC?

A) 8.06 percent
B) 11.75 percent
C) 12.65 percent
D) 13.43 percent