You are given the following information for Lighting Power Company. Assume the company's tax rate is 21 percent. Debt: Common stock: 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. 390,000 shares outstanding, selling for $57 per share; the beta is 1.14. 16,500 shares of 3.3 percent preferred stock outstanding, a $100 par value, currently selling for $78 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.) Preferred stock:
You are given the following information for Lighting Power Company. Assume the company's tax rate is 21 percent. Debt: Common stock: 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. 390,000 shares outstanding, selling for $57 per share; the beta is 1.14. 16,500 shares of 3.3 percent preferred stock outstanding, a $100 par value, currently selling for $78 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.) Preferred stock:
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
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![Problem 14-15 Finding the WACC [LO3]
You are given the following information for Lighting Power Company. 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.
390,000 shares outstanding, selling for $57 per share; the beta is 1.14.
16,500 shares of 3.3 percent preferred stock outstanding, a $100 par
value, currently selling for $78 per share.
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.)
Common
stock:
Preferred
stock:
Market:
WACC
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F85327d26-620a-4a89-a8fe-79e3c5e14b63%2Fdf019173-29aa-486d-8ac0-b2546830f2a3%2Ft7r45u_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 14-15 Finding the WACC [LO3]
You are given the following information for Lighting Power Company. 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.
390,000 shares outstanding, selling for $57 per share; the beta is 1.14.
16,500 shares of 3.3 percent preferred stock outstanding, a $100 par
value, currently selling for $78 per share.
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.)
Common
stock:
Preferred
stock:
Market:
WACC
%
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