Homework Assignment #$6$ Cost of Capital

Given the following information for Watson Power Co$.,$ find the WACC. Assume the company's tax rate is $35$ percent.

Debt: $,10,0006\mathrm{.}4$ percent coupon bonds outstanding, $$1,000$ par value, $25$ years to maturity, selling for $108$ percent of par; the bonds make semiannual payments.

Common $495,000$ shares outstanding, selling for $$63$ per share; the beta is $1\mathrm{.}15.$

stock:

Preferred $35,000$ shares of $3\mathrm{.}5$ percent preferred stock outstanding, currently selling for $$72$ stock: per share.

Market: $,7$ percent market risk premium and $3\mathrm{.}2$ percent risk$-$free rate.