1) Consider the following information for Evenflow Power Co.,

Debt:		4,000 7.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 104 percent of par; the bonds make semiannual payments.
Common stock:		96,000 shares outstanding, selling for $56 per share; the beta is 1.09.
Preferred stock:		12,500 shares of 6.5 percent preferred stock outstanding, currently selling for $105 per share.
Market:		9 percent market risk premium and 5.5 percent risk-free rate.

Assume the company's tax rate is 33 percent.

Required:

Find the WACC. (Do not round your intermediate calculations.)

rev: 09_20_2012

10.17%

10.57%

10.07%

11.07%

10.32%

2) Filer Manufacturing has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $75 million, has a 8 percent coupon, and sells for 98 percent of par. The second issue has a face value of $55 million, has a 9 percent coupon, and sells for 107 percent of par. The first issue matures in 23 years, the second in 7 years.

The most recent dividend was $4.5 and the dividend growth rate is 8 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 30 percent. what is the company WACC?