You are given the following information for Tara Ita Power Co. Assume the company’s tax rate is 25 percent. Debt: 9,000 6.4 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: 360,000 shares outstanding, selling for $54 per share; the beta is 1.10. Market: 11 percent market risk premium and 4.4 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 Tara Ita Power Co. Assume the company’s tax rate is 25 percent. Debt: 9,000 6.4 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: 360,000 shares outstanding, selling for $54 per share; the beta is 1.10. Market: 11 percent market risk premium and 4.4 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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You are given the following information for Tara Ita Power Co. Assume the company’s tax rate is 25 percent. |
Debt: | 9,000 6.4 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: | 360,000 shares outstanding, selling for $54 per share; the beta is 1.10. |
Market: | 11 percent market risk premium and 4.4 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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