Common stock and debt and preferred stock

Assignment Help Financial Management

Reference no: EM13927940

You are given the following information for Watson Power Co. Assume the company’s tax rate is 38 percent.

Debt: 9,000 7.6 percent coupon bonds outstanding, $1,000 par value, 30 years to maturity, selling for 105 percent of par; the bonds make semi annual payments.

Common stock: 480,000 shares outstanding, selling for $66 per share; the beta is 1.09.

Preferred stock: 26,000 shares of 4 percent preferred stock outstanding, currently selling for $86 per share.

Market: 9 percent market risk premium and 5.6 percent risk-free rate.

What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC %

Reference no: EM13927940

Questions Cloud

What is the projects payback : Project K costs $35,000, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 9%. What is the project's payback?

Build them a bond portfolio that has no default risk : You have a client that wants you to build them a bond portfolio that has no default risk and a target date of 13 years. (Their 5-year old child will attend college in 13 years. You are responsible for their college savings.) The client wants to inves..

Transactions takes place in secondary markets : Which of the following transactions takes place in secondary markets?

What is the firms cost of capital : CDK, Ind. just paid a dividend of $1.75 per share. It is anticipated that the company will maintain a 3 percent annual dividend growth rate. If a share of CDK, Inc. currently sells for $24.00 per share, what is the firm’s cost of capital? (Please Sho..

Common stock and debt and preferred stock : You are given the following information for Watson Power Co. Assume the company’s tax rate is 38 percent. Debt: 9,000 7.6 percent coupon bonds outstanding, $1,000 par value, 30 years to maturity, selling for 105 percent of par; the bonds make semi an..

What is the companys cost of equity capital : The Graber Corporation’s common stock has a beta of 1.2. If the risk-free rate is 4.3 percent and the expected return on the market is 13 percent, what is the company’s cost of equity capital?

Trying to determine its cost of debt : Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 14 years to maturity that is quoted at 104 percent of face value. The issue makes semiannual payments and has an embedded cost of 8 percent annually. Wha..

Exercised due diligence in evaluating investment proposal : If you were assessing the extent to which a financial consultant exercised due diligence in evaluating an investment proposal, would you be influenced by the consultant’s choice between internal rate of return and present value as an evaluation metho..

Considering a project that will generate perpetual cash flow : A firm is considering a project that will generate perpetual cash flows of $50,000 per year beginning next year. The project has the same risk as the firm's overall operations. If the firm's WACC is 12%, and its debt-to-equity ratio is 1.33, what is ..

User Account

All Pages