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Consider the following information for Watson Power Co.: Debt: 4,500 5.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 102
Consider the following information for Watson Power Co.: |
Debt: | 4,500 5.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 102 percent of par; the bonds make semiannual payments. | ||
Common stock: | 94,500 shares outstanding, selling for $64 per share; the beta is 1.1. | ||
Preferred stock: | 13,000 shares of 4.5 percent preferred stock outstanding, currently selling for $104 per share. | ||
Market: | 7 percent market risk premium and 4.5 percent risk-free rate. | ||
Assume the company's tax rate is 32 percent. |
Find the WACC. |
Multiple Choice
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7.93%
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8.09%
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8.03%
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8.68%
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8.43%
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