You are given the following information for Lightning Power Co. Assume the company’s tax rate is 21 percent. Debt: 6,000 5.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. Common stock: 390,000 shares outstanding, selling for $57 per share; beta is 1.14. Preferred stock: 16,500 shares of 3.3 percent preferred stock outstanding, currently selling for $78 per share. The par value is $100 per share. Market: 5 percent market risk premium and 4.3 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.)
You are given the following information for Lightning Power Co. Assume the company’s tax rate is 21 percent. Debt: 6,000 5.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. Common stock: 390,000 shares outstanding, selling for $57 per share; beta is 1.14. Preferred stock: 16,500 shares of 3.3 percent preferred stock outstanding, currently selling for $78 per share. The par value is $100 per share. Market: 5 percent market risk premium and 4.3 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.)
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 14P
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Question
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You are given the following information for Lightning Power Co. Assume the company’s tax rate is 21 percent. |
| Debt: |
6,000 5.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. |
| Common stock: | 390,000 shares outstanding, selling for $57 per share; beta is 1.14. |
| |
16,500 shares of 3.3 percent preferred stock outstanding, currently selling for $78 per share. The par value is $100 per share. |
| Market: | 5 percent market risk premium and 4.3 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.) |
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