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Consider the following information for Evenflow Power Co., Debt: 2,500 5.5 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 105
Consider the following information for Evenflow Power Co., |
Debt: | 2,500 5.5 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. | ||
Common stock: | 55,000 shares outstanding, selling for $60 per share; the beta is 1.1. | ||
Preferred stock: | 8,500 shares of 4.5 percent preferred stock outstanding, currently selling for $107 per share. | ||
Market: | 6 percent market risk premium and 4.5 percent risk-free rate. | ||
Assume the company's tax rate is 33 percent.
Find the WACC. |
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