You are given the following information for Watson Power Co. Assume the company's tax rate is 25 percent. Debt: 10,000 5.9 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. Common stock: 430,000 shares outstanding, selling for $61 per share; the beta is 1.12. Preferred stock:18,500 shares of 3.7 percent preferred stock outstanding, currently selling for $82 per share. The par value is $100 per share. Market: 6 percent market risk premium and 4.7 percent risk-free rate. What is the company's WACC?

You are given the following information for Watson Power Co. Assume the company's tax rate is 25 percent. Debt: 10,000 5.9 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. Common stock: 430,000 shares outstanding, selling for $61 per share; the beta is 1.12. Preferred stock:18,500 shares of 3.7 percent preferred stock outstanding, currently selling for $82 per share. The par value is $100 per share. Market: 6 percent market risk premium and 4.7 percent risk-free rate. What is the company's WACC?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 8P

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