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. 4 5 6 21% 7 8 9 10 Tax rate Debt Bonds outstanding Settlement date Maturity date Annual coupon rate Coupons per year Bond price (% of par) Redemption value (% of par) Par value 11 10,000 01/01/00 01/01/25 6.40% 2 108 100 1.000 12 13 14 15 S S 16 Common stock ILU 15 16 NU VOI TU pay Par value 1,000 17 18 Common stock Shares outstanding Beta Share price 19 495,000 1.15 63 20 21 22 23 24 25 Preferred stock outstanding Shares outstanding Dividend percentage Share price 35,000 3.50% 72 $ 28 29 30 31 Market Market risk premium Risk-free rate 7.00% 3.20% 12 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 constien 32 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 $ 10,800,000 33 34 35 35 32 Market value of equity S 31,185,000 38 Market value of preferred $ 2,520,000 39 40 Market value of firm S 44,505,000 41 42 Market value weight of debt 43 4 Market value of weight equity 15 25 Market value of weight preferred 45 Pretax cost of debt 50 Aftertax cost of debt Market value of weight preferred Pretax cost of debt Aftertax cost of debt Cost of equity 11 25% Cost of preferred 4.86% WACC Sheet1 Activa