Question

Information on Gerken Power Co., is shown below. Assume the company’s tax rate is 35 percent.

Debt:		9,500 9 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 99 percent of par; the bonds make semiannual payments.
Common stock:		220,000 shares outstanding, selling for $84.00 per share; beta is 1.25.
Preferred stock:		13,000 shares of 5.75 percent preferred stock outstanding, currently selling for $97.00 per share.
Market:		7 percent market risk premium and 4.8 percent risk-free rate.

Required:
Calculate 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.)
  
WACC             %

Answer 1