You are given the following information concerning Janicek Power Co. Assume that the corporate tax rate is 20% ; market risk premium is 8% and risk free rate is 6 %. Calculate and comment on the WACC.

Debt: 6,000 bonds outstanding at a coupon rate of 10%, $1000 par value,15 years to maturity, selling for 90% of par; the bonds make semi-annually payments.

Common stock: 6,000 shares outstanding, selling for $75 per share; beta is 1.10.

Preferred Stock: 6,000 shares of 5.5 percent preferred stock outstanding, currently selling for $85.