Given the following information for Watson Power Co., find the WACC. Assume the company's tax rate is 21 percent. Debt: 10,000 6.4 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 108 percent of par; the bonds make semiannual payments. Common stock: 495,000 shares outstanding, selling for $63 per share; the beta is 1.15. Preferred stock: 35,000 shares of 3.5 percent preferred stock outstanding, currently selling for $72 per share. Market: 7 percent market risk premium and 3.2 percent risk-free rate. 21% thos Tax rate Debt Bonds outstanding Settlement date Maturity date Annual coupon rate Coupons per year Bond price (% of par) ntinn alin 10,000 01/01/00 01/01/25 6.40% 108 DATA RIVIEW VIEW Sign in HC HOME x AW BIN INSERT PAGE LAYOUT FORMULAS 12: A . Alignment Number Cells dining Conditional Formatas Cell Formatting Table Styles Styles 01/01/00 01/01/25 6.40% Settlement date Maturity date Annual coupon rate Coupons per year Bond price (% of par) Redemption value (% of par) Par value 108 100 References 1,000 Common stock Shares outstanding Beta Share price 495,000 1.15 63 Preferred stock outstanding Shares outstanding Dividend percentage Share price 35,000 3.50% Market Market risk premium Risk-free rate 7.00% 3.20% Paste BTU . A Aliment Number Alignment Number Cells Editing Conditional Format as Cell Formatting Table Styles Styles Clipboard Font DS Complete the following analysis. Do not hard code values in your calculations. Leave the "Basis" input blank in the YIELD function. You must use the built-in Excel function to answer this question. Market value of debt Market value of equity Market value of preferred Market value of firm Market value weight of debt Market value of weight equity Market value of weight preferred Pretax cost of debt Formatting Table Styles Styles Clipboard D5 Market value of preferred Market value of firm Se Market value weight of debt Market value of weight equity Market value of weight preferred Pretax cost of debt 8. Aftertax cost of debt Cost of equity Cost of preferred WACC Given the following information for Watson Power Co., find the WACC. Assume the company's tax rate is 21 percent. Debt: 10,000 6.4 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 108 percent of par; the bonds make semiannual payments. Common stock: 495,000 shares outstanding, selling for $63 per share; the beta is 1.15. Preferred stock: 35,000 shares of 3.5 percent preferred stock outstanding, currently selling for $72 per share. Market: 7 percent market risk premium and 3.2 percent risk-free rate. 21% thos Tax rate Debt Bonds outstanding Settlement date Maturity date Annual coupon rate Coupons per year Bond price (% of par) ntinn alin 10,000 01/01/00 01/01/25 6.40% 108 DATA RIVIEW VIEW Sign in HC HOME x AW BIN INSERT PAGE LAYOUT FORMULAS 12: A . Alignment Number Cells dining Conditional Formatas Cell Formatting Table Styles Styles 01/01/00 01/01/25 6.40% Settlement date Maturity date Annual coupon rate Coupons per year Bond price (% of par) Redemption value (% of par) Par value 108 100 References 1,000 Common stock Shares outstanding Beta Share price 495,000 1.15 63 Preferred stock outstanding Shares outstanding Dividend percentage Share price 35,000 3.50% Market Market risk premium Risk-free rate 7.00% 3.20% Paste BTU . A Aliment Number Alignment Number Cells Editing Conditional Format as Cell Formatting Table Styles Styles Clipboard Font DS Complete the following analysis. Do not hard code values in your calculations. Leave the "Basis" input blank in the YIELD function. You must use the built-in Excel function to answer this question. Market value of debt Market value of equity Market value of preferred Market value of firm Market value weight of debt Market value of weight equity Market value of weight preferred Pretax cost of debt Formatting Table Styles Styles Clipboard D5 Market value of preferred Market value of firm Se Market value weight of debt Market value of weight equity Market value of weight preferred Pretax cost of debt 8. Aftertax cost of debt Cost of equity Cost of preferred WACC
