Consider the following information for Evenflow Power Co.,

Debt:		2,500 5.5 percent coupon bonds outstanding, $1,000 par value, 17 years to maturity, selling for 103 percent of par; the bonds make semiannual payments.
Common stock:		57,500 shares outstanding, selling for $64 per share; the beta is 1.16.
Preferred stock:		8,500 shares of 4.5 percent preferred stock outstanding, currently selling for $105 per share.
Market:		6 percent market risk premium and 4 percent risk-free rate.

Assume the company's tax rate is 31 percent.

Required:

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

rev: 09_20_2012

Multiple Choice

• 8.06%

• 7.38%

• 7.48%

• 7.88%

• 7.56%