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Question 19-22 are based on the following information Given the following information for Gerken Power Co find the WACC. Assume the company's tax rate is
Question 19-22 are based on the following information Given the following information for Gerken Power Co find the WACC. Assume the company's tax rate is 35 percent. Debt: 15.500 6.4% coupon bonds outstanding. $1.000 par value. 25 years to maturity, selling 107% of par, the bonds make semiannual payments. Common stock: 495,000 shares outstanding selling for $82 per share; beta is 1.20 Preferred stock: 20,000 shares of 4.20% preferred stock outstanding, currently selling for $90 per share. Market: 7% market risk premium and 3.10% risk-free rate. What is the cost of preferred stock? Question 22 11
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