Final answer:
The WACC is the average rate of return a company needs to generate to cover its capital costs and satisfy investors. Without knowing the cost of debt, it is not possible to calculate the WACC in this case.
Step-by-step explanation:
The weighted average cost of capital (WACC) is a financial metric that represents the average rate of return a company needs to generate in order to cover its capital costs and satisfy its investors. It is calculated by taking into account the proportion of each type of capital (debt and equity) and the cost associated with each.
In this case, Windsor Industries has 9 percent coupon bonds outstanding. To calculate the WACC, you would need to know the cost of debt, which is the yield on the bonds. However, this information is not provided in the question. Without knowing the cost of debt, it is not possible to calculate the WACC.
To calculate the cost of debt, you would need to know the market price of the bond and the coupon rate. With this information, you could calculate the yield on the bond and use it as the cost of debt in the WACC calculation.