Y ou are given the following information for Watson Power Co. Assume the company’s tax rate is 21 percent. Debt: 21,000 7 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 108 percent of par; the bonds make semiannual payments. Common stock: 540,000 shares outstanding, selling for $72 per share; the beta is 1.18.Preferred stock: 24,000 shares of 4.8 percent preferred stock outstanding, currently selling for $93 per share. The par value is $100 per share. Market: 5 percent market risk premium and 5.3 percent risk-free rate. What is the company's WACC?
Y ou are given the following information for Watson Power Co. Assume the company’s tax rate is 21 percent. Debt: 21,000 7 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 108 percent of par; the bonds make semiannual payments. Common stock: 540,000 shares outstanding, selling for $72 per share; the beta is 1.18.Preferred stock: 24,000 shares of 4.8 percent preferred stock outstanding, currently selling for $93 per share. The par value is $100 per share. Market: 5 percent market risk premium and 5.3 percent risk-free rate. What is the company's WACC?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Y
ou are given the following information for Watson Power Co. Assume the company’s tax rate is 21 percent.
Debt:
21,000 7 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 108 percent of par; the bonds make semiannual payments.
Common stock: 540,000 shares outstanding, selling for $72 per share; the beta is 1.18.
24,000 shares of 4.8 percent preferred stock outstanding, currently selling for $93 per share. The par value is $100 per share.
Market: 5 percent market risk premium and 5.3 percent risk-free rate.
What is the company's WACC?
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