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Consider the following information for Watson Power Co.: Debt: 5,500 8 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity,selling for 104 percent
Consider the following information for Watson Power Co.:
Debt:5,500 8 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity,selling for 104 percent of par; the bonds make semiannual payments.
Common stock:126,500 shares outstanding, selling for $55 per share; the beta is 1.07.
Preferred stock:18,000 shares of 6.5 percent preferred stock outstanding, currently selling for $105 per share.
Market:10 percent market risk premium and 6.5 percent risk-free rate.Assume the company's tax rate is 32 percent.
Find the WACC.
- 11.22%
- 12%
- 11.05%
- 11.45%
- 10.95%
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