Consider the following information for Evenflow Power Co.,

Debt:		3,000 5.5 percent APR coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 105 percent of par; the bonds make semiannual payments.
Common stock:		69,000 shares outstanding, selling for $57 per share; the beta is 1.07.
Preferred stock:		8,500 shares of 4.5 percent preferred stock outstanding (note: take this percentage and convert it into decimal format, then multiply times 100 to find the preferred dividend), currently selling for $107 per share.
Market:		7 percent market risk premium and 4 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

Multiple Choice

• 7.38%

• 7.63%

• 8.15%

• 7.88%

• 7.48%