Question

You are looking at the following information:

  

Debt:		3,500 9 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 104 percent of par; the bonds make semiannual payments.
Common stock:		70,000 shares outstanding, selling for $59 per share; the beta is 1.17.
Preferred stock:		10,500 shares of 8.5 percent preferred stock (review my Ch.8 slide 43: what does "...% preferred stock" phrase mean?) outstanding, currently selling for $106 per share.
Market:		10 percent market risk premium and 8 percent risk-free rate.

  

The company is in the 33 percent tax rate bracket based on its corporate income.

  

Required:

  

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

Answer 1