You are given the following information for Lightning Power Company. Assume the company's tax rate is 21 percent. Debt: Common stock: Preferred stock: Market: 16,000 6.5 percent coupon bonds outstanding, $1,000 par value, 27 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. 490,000 shares outstanding, selling for $67 per share; beta is 1.18. 21,500 shares of 4.3 percent preferred stock outstanding, a $100 par value, selling for $88 per share. 6 percent market risk premium and 5.4 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. Answer is complete but not entirely correct. WACC 8.53%
You are given the following information for Lightning Power Company. Assume the company's tax rate is 21 percent. Debt: Common stock: Preferred stock: Market: 16,000 6.5 percent coupon bonds outstanding, $1,000 par value, 27 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. 490,000 shares outstanding, selling for $67 per share; beta is 1.18. 21,500 shares of 4.3 percent preferred stock outstanding, a $100 par value, selling for $88 per share. 6 percent market risk premium and 5.4 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. Answer is complete but not entirely correct. WACC 8.53%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![You are given the following information for Lightning Power Company. Assume the company's tax rate is 21 percent.
Debt:
Common stock:
Preferred stock:
Market:
16,000 6.5 percent coupon bonds outstanding, $1,000 par value, 27 years
to maturity, selling for 105 percent of par; the bonds make semiannual
payments.
490,000 shares outstanding, selling for $67 per share; beta is 1.18.
21,500 shares of 4.3 percent preferred stock outstanding, a $100 par
value, selling for $88 per share.
6 percent market risk premium and 5.4 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.
Answer is complete but not entirely correct.
WACC
8.53%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2d31b727-ca47-41d3-943c-2c937609eac6%2Fffef5f55-07fb-4a20-a58a-218c748f4e2d%2Fm72faqu_processed.png&w=3840&q=75)
Transcribed Image Text:You are given the following information for Lightning Power Company. Assume the company's tax rate is 21 percent.
Debt:
Common stock:
Preferred stock:
Market:
16,000 6.5 percent coupon bonds outstanding, $1,000 par value, 27 years
to maturity, selling for 105 percent of par; the bonds make semiannual
payments.
490,000 shares outstanding, selling for $67 per share; beta is 1.18.
21,500 shares of 4.3 percent preferred stock outstanding, a $100 par
value, selling for $88 per share.
6 percent market risk premium and 5.4 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.
Answer is complete but not entirely correct.
WACC
8.53%
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