Loran Chalices Inc. hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The company’s noncallable bonds mature in 20 years, have a coupon rate of 7.00% paid annually, a par value of $1,000, and a current market price of $875. (2) The company’s tax rate is 25%. (3) The required rate of return on the company’s common stock based on CAPM is 10.3%. (4) The target capital structure consists of 45% debt, with the remainder comprised of common equity. What is its WACC?
