Question
In: Finance
You are given the following information for Lightning Power Co. Assume the company’s tax rate is...
|
You are given the following information for Lightning Power Co. Assume the company’s tax rate is 24 percent. |
| Debt: |
24,000 7.3 percent coupon bonds outstanding, $1,000 par value, 18 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. |
| Common stock: | 570,000 shares outstanding, selling for $75 per share; beta is 1.19. |
| Preferred stock: |
25,500 shares of 5.1 percent preferred stock outstanding, currently selling for $96 per share. The par value is $100 per share. |
| Market: | 6 percent market risk premium and 4.9 percent risk-free rate. |
|
What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC= % |
Solutions
Expert Solution
Solution:
Debt:
Total Bonds = 24,000
Market price = 1070
Total market value of the bond = 24000 *1070 = 25680000
Calculate the YTM for the bond
YTM = 6.63%
The WACC is 9.27%
jeff jeffy answered 1 year agoRelated Solutions
You are given the following information for Lightning Power Co. Assume the company’s tax rate is...
You are given the following information for Lightning Power Co.
Assume the company’s tax rate is 24 percent.
Debt:
24,000 7.3 percent coupon bonds outstanding, $1,000 par value,
18 years to maturity, selling for 107 percent of par; the bonds
make semiannual payments.
Common stock:
570,000 shares outstanding, selling for $75 per share; beta is
1.19.
Preferred stock:
25,500 shares of 5.1 percent preferred stock outstanding,
currently selling for $96 per share. The par value is $100 per
share.
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