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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
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%
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