onsider the following information for Watson Power Co.:

Debt:		2,500 6.5 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 105 percent of par; the bonds make semiannual payments.
Common stock:		57,500 shares outstanding, selling for $59 per share; the beta is 1.09.
Preferred stock:		8,500 shares of 6 percent preferred stock outstanding, currently selling for $106 per share.
Market:		8 percent market risk premium and 6 percent risk-free rate.

Assume the company's tax rate is 33 percent.

Find the WACC.

Multiple Choice

• 9.68%

  Incorrect

• 10.26%

• 9.5%

• 9.4%

• 9.9%