Given the following information on Ke-Ma-Gen Ltd., what is its WACC? Debt:·Number

Given the following information on Ke-Ma-Gen Ltd., what is its WACC?

Debt:

·        Number

of bonds = 10,000

·        Par value = $1,000

·        Coupon rate = 9% (semi-annual coupons)

·        Time to maturity = 10 years

·        Market value = 98% of par

Common equity:

·        Number of shares outstanding = 1,000,000

·        Par value = $1

·        Price per share = $3.50

·        Dividends per share = $0.70

Preferred equity:

·        Number of shares outstanding = 50,000

·        Price per share = $20

·        Dividend yield = 5%

Other information:

·        Tax rate = 40%

·        Equity beta = 1.2

·        Market risk premium = 16%

·        Risk-free rate = 5%