Question
You are given the following information for Watson Power Co. Assume the companys tax rate is 40 percent. Debt: 5,000 7.8 percent coupon bonds outstanding,
| You are given the following information for Watson Power Co. Assume the companys tax rate is 40 percent. |
| Debt: | 5,000 7.8 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. |
| Common stock: | 500,000 shares outstanding, selling for $68 per share; the beta is 1.11. |
| Preferred stock: | 28,000 shares of 3 percent preferred stock outstanding, currently selling for $88 per share. |
| Market: | 9 percent market risk premium and 5.8 percent risk-free rate. |
| What is the company's WACC? |
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Small Brewery Finance
Authors: Maria Pearman
1st Edition
1938469526, 978-1938469527
