You are given the following information for Lightning Power Company. Assume the company's tax rate is 22 percent. 7,000 5.6 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. 400,000 shares outstanding, selling for $58 per share; beta is 1.09. 17,000 shares of 3.4 percent preferred stock outstanding, a $100 par value, selling for $79 per share. 6 percent market risk premium and 4.4 percent risk-free rate. Debt: Common stock: Preferred stock: Market: What is the company's WACC? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. WACC 36.81 %
You are given the following information for Lightning Power Company. Assume the company's tax rate is 22 percent. 7,000 5.6 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. 400,000 shares outstanding, selling for $58 per share; beta is 1.09. 17,000 shares of 3.4 percent preferred stock outstanding, a $100 par value, selling for $79 per share. 6 percent market risk premium and 4.4 percent risk-free rate. Debt: Common stock: Preferred stock: Market: What is the company's WACC? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. WACC 36.81 %
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 Lightning Power Company. Assume the company's tax rate is 22 percent.
7,000 5.6 percent coupon bonds outstanding, $1,000 par value, 22 years
to maturity, selling for 104 percent of par; the bonds make semiannual
payments.
400,000 shares outstanding, selling for $58 per share; beta is 1.09.
17,000 shares of 3.4 percent preferred stock outstanding, a $100 par
value, selling for $79 per share.
6 percent market risk premium and 4.4 percent risk-free rate.
Debt:
Common stock:
Preferred stock:
Market:
What is the company's WACC?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
WACC
36.81 %
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