Given the following information for Watson Power Co., Find the WACC. Assume the company’s tax rate is 35 percent. Debt: 10,000 6.4 percent coupon bonds outstanding. $1,000 par value, 25 years to maturity, selling for 108 percent of par, the bonds make semiannual payments. Common stock: 495,000 shares outstanding, selling for $63 per share; the beta is 1.15. Preferred stock: 35,000 shares of 3.5 percent preferred stock outstanding, currently selling for $72 per share Market: 7 percent market risk premium and 3.2 percent risk-free rate.
Given the following information for Watson Power Co., Find the WACC. Assume the company’s tax rate is 35 percent. Debt: 10,000 6.4 percent coupon bonds outstanding. $1,000 par value, 25 years to maturity, selling for 108 percent of par, the bonds make semiannual payments. Common stock: 495,000 shares outstanding, selling for $63 per share; the beta is 1.15. Preferred stock: 35,000 shares of 3.5 percent preferred stock outstanding, currently selling for $72 per share Market: 7 percent market risk premium and 3.2 percent risk-free rate.
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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Given the following information for Watson Power Co., Find the WACC. Assume the company’s tax rate is 35 percent.
Debt: 10,000 6.4 percent coupon bonds outstanding. $1,000 par value, 25 years to maturity, selling for 108 percent of par, the bonds make semiannual payments.
Common stock: 495,000 shares outstanding, selling for $63 per share; the beta is 1.15.
Market: 7 percent market risk premium and 3.2 percent risk-free rate.
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