You are given the following information for Lighting Power Company. Assume the company's tax rate is 25 percent. Debt: 25,000 7.4 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 106 percent of par; the bonds make semiannual payments. Common stock: 580,000 shares outstanding, selling for $76 per share; the beta is 1.15. Preferred stock: 26,000 shares of 5.2 percent preferred stock outstanding, a $100 par value, currently selling for $97 per share. Market: 6 percent market risk premium and 4.8 percent risk- free rate. What is the company's WACC? (Do not round
You are given the following information for Lighting Power Company. Assume the company's tax rate is 25 percent. Debt: 25,000 7.4 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 106 percent of par; the bonds make semiannual payments. Common stock: 580,000 shares outstanding, selling for $76 per share; the beta is 1.15. Preferred stock: 26,000 shares of 5.2 percent preferred stock outstanding, a $100 par value, currently selling for $97 per share. Market: 6 percent market risk premium and 4.8 percent risk- free rate. What is the company's WACC? (Do not round
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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Transcribed Image Text:You are given the following information for Lighting Power Company. Assume the company's tax rate is 25
percent. Debt: 25,000 7.4 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for
106 percent of par; the bonds make semiannual payments. Common stock: 580,000 shares outstanding, selling
for $76 per share; the beta is 1.15. Preferred stock: 26,000 shares of 5.2 percent preferred stock outstanding, a
$100 par value, currently selling for $97 per share. Market: 6 percent market risk premium and 4.8 percent risk-
free rate. What is the company's WACC? (Do not round
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