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Find the weighted average cost of capital

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Reference no: EM131429322

Given the following information for Lightening Power CO., find the weighted average cost of capital (WACC). Assume the company's tax rate is 35%.

Bond

Coupon Rate

Price Quote (% of Par)

Maturity

Face Value

Coupon Payment

1

6.00%

105.86

5 years

$4,000,000

Semiannual

2

7.50%

114.52

8 years

$3,500,000

Semiannual

Common stock: 310,000 shares outstanding, selling for $57 per share; the beta is 1.05.

Preferred stock: 15,000 shares of preferred stock outstanding, currently selling for $72 per share and annual dividend is $4 per share.

Market: 7% market risk premium and 4.5% risk-free rate

Reference no: EM131429322

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