Question
In: Finance
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 is 35 percent. |
| Find the WACC. |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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: 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: 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 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 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: 4,500 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 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 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...
Consider the following information for Evenflow Power Co., Debt: 4,000 5.5 percent coupon bonds outstanding, $1,000...
Consider the following information for Evenflow Power Co., Debt:
4,000 5.5 percent coupon bonds outstanding, $1,000 par value, 23
years to maturity, selling for 105 percent of par; the bonds make
semiannual payments. Common stock: 96,000 shares outstanding,
selling for $58 per share; the beta is 1.15. Preferred stock:
12,000 shares of 4.5 percent preferred stock outstanding, currently
selling for $108 per share. Market: 7.5 percent market risk premium
and 4.5 percent risk-free rate. Assume the company's tax rate is...
Consider the following information on Huntington Power Co. Debt: 4,000, 7% semiannual coupon bonds outstanding, $1,000...
Consider the following information on Huntington Power Co.
Debt: 4,000, 7% semiannual coupon bonds outstanding, $1,000 par
value, 18 years to maturity, selling for 102 percent of par; the
bonds make semiannual payments.
Preferred Stock: 10,000 outstanding with par value of $100 and a
market value of 105 and $10 annual dividend.
Common Stock: 84,000 shares outstanding, selling for $56 per share,
the beta is 2.08
The market risk premium is 5.5%, the risk free rate is 3.5% and
Huntington’s...
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