Question
You are given the following information for Watson Power Co. Assume the companys tax rate is 24 percent. Debt: 19,000 6.8 percent coupon bonds outstanding,
You are given the following information for Watson Power Co. Assume the companys tax rate is 24 percent. |
Debt: | 19,000 6.8 percent coupon bonds outstanding, $1,000 par value, 24 years to maturity, selling for 111 percent of par; the bonds make semiannual payments. |
Common stock: | 520,000 shares outstanding, selling for $70 per share; the beta is 1.21. |
Preferred stock: | 23,000 shares of 4.6 percent preferred stock outstanding, currently selling for $91 per share. The par value is $100 per share. |
Market: | 6 percent market risk premium and 5.5 percent risk-free rate. |
What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
**ANSWER IS NOT 7.80% |
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