Alto and Tenor Have 15,000 Shares of Stock Outstanding at a Market

Multiple Choice

Alto and Tenor have 15,000 shares of stock outstanding at a market price of $21 per share.The firm also has $140,000 of 6 percent bonds outstanding that are selling at par.The firm does not expect to pay taxes for the foreseeable future.The cost of equity is 14.7 percent.What is the value of R_WACC?

A) 12.02%
B) 7.38%
C) 10.83%
D) 8.64%
E) 11.09%