Question: Consider the following information for even flow Po…
Consider the following information for even flow Power Co.,
Debt: 3,500 8 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 102 percent of par; the bonds make semiannual payments.
Common stock: 84,000 shares outstanding, selling for $60 per share; the beta is 1.1.
Preferred stock: 10,000 shares of 6.5 percent preferred stock outstanding (note: multiply this percentage in decimal format times 100 to get the dividend), currently selling for $105 per share.
Market: 9.5 percent market risk premium and 6 percent risk-free rate.
Assume the company’s tax rate is 34 percent.
Required: Find the WACC. (Do not round your intermediate calculations.)
12.14%
11.56%
11.24%
11.06%
11.16%
