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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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