Billick Brothers is estimating its WACC. The company has

Billick Brothers is estimating its WACC. The company has collected the following information:

Capital structure consists of 40 percent debt and 60 percent common equity. The company has 20-year bonds outstanding with a 9 percent annual coupon that are trading at par. The company’s tax rate is 40 percent. The risk-free rate is 5.5 percent. The market risk premium is 5 percent. The stock’s beta is 1.4.

What is the company’s WACC?

1. 9.71%

2. 9.66%

3. 8.31%

4. 11.18%

5. 11.10%