Information on Gerken Power Co., is shown below. Assume the company’s tax rate is 34 percent. Debt: 8,600 7.9 percent coupon bonds outstanding, $1,000 par value, 24 years to maturity, selling for 104.5 percent of par; the bonds make semiannual payments. Common stock: 211,000 shares outstanding, selling for $83.10 per share; beta is 1.16. Preferred stock: 12,100 shares of 5.8 percent preferred stock outstanding, currently selling for $97.90 per share. Market: 7.05 percent market risk premium and 4.85 percent risk-free rate. Required:Calculate 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.) WACC %

WACC = (Weight of debt * cost of debt) + (Weight of preferred * Cost of preferred) * (Weight of…

Answered: Information on Gerken Power Co., is…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 12RE: Given the following year-end information, compute Greenwood Corporations basic and diluted earnings...

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Information on Gerken Power Co., is shown below. Assume the company’s tax rate is 34 percent.

Debt:		8,600 7.9 percent coupon bonds outstanding, $1,000 par value, 24 years to maturity, selling for 104.5 percent of par; the bonds make semiannual payments.

Common stock:		211,000 shares outstanding, selling for $83.10 per share; beta is 1.16.

Preferred stock:		12,100 shares of 5.8 percent preferred stock outstanding, currently selling for $97.90 per share.

Market:		7.05 percent market risk premium and 4.85 percent risk-free rate.

Required:
Calculate 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.)

WACC %

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