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...
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24,000 7.3 percent coupon bonds outstanding, $1,000 par value,
18 years to maturity, selling for 107 percent of par; the bonds
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Common stock:
570,000 shares outstanding, selling for $75 per share; beta is
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Preferred stock:
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