Question
Show the work please Given the following information for Watson Power Co., find the WACC. Assume the company tax rate is 20 percent. Debt: 12,000
Show the work please
Given the following information for Watson Power Co., find the WACC. Assume the company tax rate is 20 percent.
Debt: 12,000 bonds with coupon rate of 6 percent. $1,000 par value, 25 years to maturity, selling for 97 percent of par (meaning its current price is $970). The bonds make semiannual coupon payments. Floatation cost is $6.
Preferred stock: 30,000 shares of preferred stock outstanding currently pay $4.20 per share dividends, sell for $58 per share with floatation cost of $2.
Common stock: 510,000 shares outstanding, selling for $75 per share; the beta is 1.22.
Market: 9 percent market risk premium and 3 percent risk-free rate.
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