Question

In: Finance

Consider the following information for Watson Power Co.: Debt: 4,500 9 percent coupon bonds outstanding, $1,000...

Consider the following information for Watson Power Co.: Debt: 4,500 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: 103,500 shares outstanding, selling for $63 per share; the beta is 1.1. Preferred stock: 15,500 shares of 7.5 percent preferred stock outstanding, currently selling for $107 per share. Market: 10 percent market risk premium and 6.5 percent risk-free rate. Assume the company's tax rate is 34 percent. Find the WACC. Multiple Choice 11.74% 12.24% 12.01% 11.84% 12.9%

Solutions

Expert Solution

Answer is 11.84%


Related Solutions

Consider the following information for Watson Power Co.: Debt: 4,500 9 percent coupon bonds outstanding, $1,000...
Consider the following information for Watson Power Co.: Debt: 4,500 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: 103,500 shares outstanding, selling for $63 per share; the beta is 1.1. Preferred stock: 15,500 shares of 7.5 percent preferred stock outstanding, currently selling for $107 per share. Market: 10 percent market risk premium and 6.5 percent risk-free rate. Assume the company's tax rate is...
Consider the following information for Watson Power Co.:      Debt: 4,500 7 percent coupon bonds outstanding,...
Consider the following information for Watson Power Co.:      Debt: 4,500 7 percent coupon bonds outstanding, $1,000 par value, 18 years to maturity, selling for 103 percent of par; the bonds make semiannual payments.   Common stock: 94,500 shares outstanding, selling for $56 per share; the beta is 1.16.   Preferred stock: 16,000 shares of 6.5 percent preferred stock outstanding, currently selling for $105 per share.   Market: 7.5 percent market risk premium and 6 percent risk-free rate.    Assume the company's tax...
Consider the following information for Watson Power Co.:      Debt: 4,500 8.5 percent coupon bonds outstanding,...
Consider the following information for Watson Power Co.:      Debt: 4,500 8.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 102 percent of par; the bonds make semiannual payments.   Common stock: 103,500 shares outstanding, selling for $55 per share; the beta is 1.09.   Preferred stock: 13,500 shares of 7.5 percent preferred stock outstanding, currently selling for $104 per share.   Market: 10.5 percent market risk premium and 7.5 percent risk-free rate.    Assume the company's tax...
Consider the following information for Evenflow Power Co., Debt: 4,500 8.5 percent coupon bonds outstanding, $1,000...
Consider the following information for Evenflow Power Co., Debt: 4,500 8.5 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. Common stock: 99,000 shares outstanding, selling for $64 per share; the beta is 1.13. Preferred stock: 13,500 shares of 8 percent preferred stock outstanding, currently selling for $106 per share. Market: 9.5 percent market risk premium and 7.5 percent risk-free rate. Assume the company's tax rate is...
Consider the following information for Watson Power Co.: Debt: 5,000 8.5 percent coupon bonds outstanding, $1,000...
Consider the following information for Watson Power Co.: Debt: 5,000 8.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. Common stock: 110,000 shares outstanding, selling for $58 per share; the beta is 1.07. Preferred stock: 17,500 shares of 8 percent preferred stock outstanding, currently selling for $106 per share. Market: 10.5 percent market risk premium and 7.5 percent risk-free rate. Assume the company's tax rate is...
Consider the following information for Watson Power Co.:      Debt: 4,000 6.5 percent coupon bonds outstanding,...
Consider the following information for Watson Power Co.:      Debt: 4,000 6.5 percent coupon bonds outstanding, $1,000 par value, 17 years to maturity, selling for 103 percent of par; the bonds make semiannual payments.   Common stock: 88,000 shares outstanding, selling for $61 per share; the beta is 1.09.   Preferred stock: 12,500 shares of 5.5 percent preferred stock outstanding, currently selling for $105 per share.   Market: 8 percent market risk premium and 4.5 percent risk-free rate. Assume the company's tax rate...
Consider the following information for Watson Power Co.:      Debt: 4,000 8.5 percent coupon bonds outstanding,...
Consider the following information for Watson Power Co.:      Debt: 4,000 8.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 105 percent of par; the bonds make semiannual payments.   Common stock: 88,000 shares outstanding, selling for $64 per share; the beta is 1.18.   Preferred stock: 13,000 shares of 7.5 percent preferred stock outstanding, currently selling for $106 per share.   Market: 9 percent market risk premium and 7.5 percent risk-free rate.    Assume the company's tax...
Consider the following information for Watson Power Co.:      Debt: 5,000 7.5 percent coupon bonds outstanding,...
Consider the following information for Watson Power Co.:      Debt: 5,000 7.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 105 percent of par; the bonds make semiannual payments.   Common stock: 115,000 shares outstanding, selling for $56 per share; the beta is 1.15.   Preferred stock: 17,500 shares of 6.5 percent preferred stock outstanding, currently selling for $107 per share.   Market: 9.5 percent market risk premium and 5.5 percent risk-free rate.    Assume the company's tax...
Consider the following information for Evenflow Power Co. Debt: 4,500 6 percent APR coupon bonds outstanding,...
Consider the following information for Evenflow Power Co. Debt: 4,500 6 percent APR coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. Common stock: 94,500 shares outstanding, selling for $55 per share; the beta is 1.06. Preferred stock: 15,000 shares of 4.5 percent preferred stock outstanding (note: take this percentage and convert it into decimal format, then multiply times 100 to find the preferred dividend), currently selling for...
Consider the following information for Evenflow Power Co., Debt: 3,500 6.5 percent coupon bonds outstanding, $1,000...
Consider the following information for Evenflow Power Co., Debt: 3,500 6.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. Common stock: 87,500 shares outstanding, selling for $55 per share; the beta is 1.2. Preferred stock: 12,500 shares of 5.5 percent preferred stock outstanding, currently selling for $107 per share. Market: 7.5 percent market risk premium and 4.5 percent risk-free rate. Assume the company's tax rate is...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT