Question

Consider the following information for Evenflow Power Co.,

  

Debt:		2,500 6.5 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 104 percent of par; the bonds make semiannual payments.
Common stock:		62,500 shares outstanding, selling for $57 per share; the beta is 1.14.
Preferred stock:		8,500 shares of 6 percent preferred stock outstanding, currently selling for $107 per share.
Market:		8 percent market risk premium and 5.5 percent risk-free rate.

  

Assume the company's tax rate is 31 percent.

  

Required:

  

Find the WACC. (Do not round your intermediate calculations.)

rev: 09_20_2012

9.78%

10.34%

9.54%

9.64%

10.04%

Answer 1