Question
Information on Lightning Power Co., is shown. Assume the companys tax rate is 21 percent. Debt: 17,100 6.2 percent coupon bonds outstanding, $1,000 par value,
Information on Lightning Power Co., is shown.
Assume the companys tax rate is 21 percent. Debt: 17,100 6.2 percent coupon bonds outstanding, $1,000 par value, 28 years to maturity, selling for 106.7 percent of par; the bonds make semiannual payments. Common stock: 565,000 shares outstanding, selling for $82.50 per share; beta is 1.05. Preferred stock: 23,000 shares of 4.3 percent preferred stock outstanding, currently selling for $91.60 per share. The par value is $100. Market: 6.7 percent market risk premium and 3.3 percent risk-free rate.
1. What is the company's cost of each form of financing?
Cost of equity-
aftertax cost of debt-
cost of preferred stock-
2. calculate the company's WACC.
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