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Consider the following information for Evenflow Power Co.,      Debt: 6,000 8.5 percent coupon bonds outstanding, $1,000 par...

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Finance

Consider the following information for Evenflow Power Co.,

  

  Debt:6,000 8.5 percent coupon bonds outstanding, $1,000 par value,22 years to maturity, selling for 103 percent of par; the bondsmake semiannual payments.
  Common stock:126,000 shares outstanding, selling for $63 per share; the betais 1.09.
  Preferred stock:19,000 shares of 7 percent preferred stock outstanding,currently selling for $105 per share.
  Market:9.5 percent market risk premium and 6 percent risk-freerate.

  

Assume the company's tax rate is 33 percent.

  

Required:

  

Find the WACC. (Do not round your intermediatecalculations.)

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Formula used for WACC WACC w1c11tw2c2w3c3wherew1 weight of    See Answer
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Transcribed Image Text

Consider the following information for Evenflow Power Co.,    Debt:6,000 8.5 percent coupon bonds outstanding, $1,000 par value,22 years to maturity, selling for 103 percent of par; the bondsmake semiannual payments.  Common stock:126,000 shares outstanding, selling for $63 per share; the betais 1.09.  Preferred stock:19,000 shares of 7 percent preferred stock outstanding,currently selling for $105 per share.  Market:9.5 percent market risk premium and 6 percent risk-freerate.  Assume the company's tax rate is 33 percent.  Required:  Find the WACC. (Do not round your intermediatecalculations.)

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