You are given the following information for Lightning Power Company. Assume the company's tax rate is 23 percent. Debt: Common stock: Preferred stock: Market: 23,000 7.2 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 106 percent of par; the bonds make semiannual payments. 560,000 shares outstanding, selling for $74 per share; beta is 1.17. 25,000 shares of 5 percent preferred stock outstanding, a $100 par value, selling for $95 per share. 7 percent market risk premium and 5.1 percent risk-free rate. What is the company's WACC?
You are given the following information for Lightning Power Company. Assume the company's tax rate is 23 percent. Debt: Common stock: Preferred stock: Market: 23,000 7.2 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 106 percent of par; the bonds make semiannual payments. 560,000 shares outstanding, selling for $74 per share; beta is 1.17. 25,000 shares of 5 percent preferred stock outstanding, a $100 par value, selling for $95 per share. 7 percent market risk premium and 5.1 percent risk-free rate. What is the company's 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
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![Problem 12-14 Finding the WACC [LO3]
You are given the following information for Lightning Power Company. Assume the company's tax rate is 23
percent.
Debt:
Common stock:
Preferred stock:
Market:
23,000 7.2 percent coupon bonds outstanding, $1,000 par value, 19 years
to maturity, selling for 106 percent of par; the bonds make semiannual
payments.
560,000 shares outstanding, selling for $74 per share; beta is 1.17.
25,000 shares of 5 percent preferred stock outstanding, a $100 par
value, selling for $95 per share.
7 percent market risk premium and 5.1 percent risk-free rate.
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
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Transcribed Image Text:Problem 12-14 Finding the WACC [LO3]
You are given the following information for Lightning Power Company. Assume the company's tax rate is 23
percent.
Debt:
Common stock:
Preferred stock:
Market:
23,000 7.2 percent coupon bonds outstanding, $1,000 par value, 19 years
to maturity, selling for 106 percent of par; the bonds make semiannual
payments.
560,000 shares outstanding, selling for $74 per share; beta is 1.17.
25,000 shares of 5 percent preferred stock outstanding, a $100 par
value, selling for $95 per share.
7 percent market risk premium and 5.1 percent risk-free rate.
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
%
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