You are given the following information for Lighting Power Company. Assume the company's tax rate is 21 percent. Debt: Common stock: 11,000 6 percent coupon bonds outstanding, $1,000 par value, 26 years to maturity, selling for 108 percent of par; the bonds make semiannual payments. 440,000 shares outstanding, selling for $62 per share; the beta is 1.13. Preferred stock: 19,000 shares of 3.8 percent preferred stock outstanding, a $100 par value, currently selling for $83 per share. Market: 7 percent market risk premium and 4.8 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.) WACC %
You are given the following information for Lighting Power Company. Assume the company's tax rate is 21 percent. Debt: Common stock: 11,000 6 percent coupon bonds outstanding, $1,000 par value, 26 years to maturity, selling for 108 percent of par; the bonds make semiannual payments. 440,000 shares outstanding, selling for $62 per share; the beta is 1.13. Preferred stock: 19,000 shares of 3.8 percent preferred stock outstanding, a $100 par value, currently selling for $83 per share. Market: 7 percent market risk premium and 4.8 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.) 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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Transcribed Image Text:You are given the following information for Lighting Power Company. Assume the
company's tax rate is 21 percent.
Debt:
Common
stock:
11,000 6 percent coupon bonds outstanding, $1,000 par value, 26 years
to maturity, selling for 108 percent of par; the bonds make semiannual
payments.
440,000 shares outstanding, selling for $62 per share; the beta is 1.13.
Preferred
stock:
19,000 shares of 3.8 percent preferred stock outstanding, a $100 par
value, currently selling for $83 per share.
Market:
7 percent market risk premium and 4.8 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.)
WACC
%
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