Consider the following information for GAP, Inc., Debt: 5,500 8.5 percent coupon bonds outstanding, $1,000 par...

Consider the following information for GAP, Inc., Debt: 5,500 8.5 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. Common stock: 115,500 shares outstanding, selling for $55 per share; the beta is 1.17. Preferred stock: 17,000 shares of 7.5 percent preferred stock outstanding, currently selling for $106 per share. Market: 10.5 percent market risk premium and 7 percent risk-free rate. Assume the company's tax rate is 31 percent. Required: Find the WACC. (Do not round your intermediate calculations.)

Expert Solution

jeff jeffy answered 10 months ago

Consider the following information for GAP, Inc., Debt: 3,000 9 percent coupon bonds outstanding, $1,000...

Consider the following information for GAP, Inc., Debt: 3,000 9 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 102 percent of par; the bonds make semiannual payments. Common stock: 63,000 shares outstanding, selling for $60 per share; the beta is 1.16. Preferred stock: 10,000 shares of 8 percent preferred stock outstanding, currently selling for $105 per share. Market: 10 percent market risk premium and 8 percent risk-free rate. Assume the company's tax rate...

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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...

You are looking at the following information: Debt: 2,500 8.5 percent coupon bonds outstanding, $1,000...

You are looking at the following information: Debt: 2,500 8.5 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: 62,500 shares outstanding, selling for $61 per share; the beta is 1.1. Preferred stock: 8,000 shares of 7 percent preferred stock (review my Ch.8 slide 43: what does "...% preferred stock" phrase mean?) outstanding, currently selling for $106 per share. Market: 10 percent market risk...

Consider the following information for Evenflow Power Co., Debt: 5,500 7.5 percent coupon bonds outstanding,...

Consider the following information for Evenflow Power Co., Debt: 5,500 7.5 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: 126,500 shares outstanding, selling for $62 per share; the beta is 1.05. Preferred stock: 17,000 shares of 7 percent preferred stock outstanding, currently selling for $103 per share. Market: 9 percent market risk premium and 7 percent risk-free rate. Assume the company's tax...

Debt: 5,500 7.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for...

Debt: 5,500 7.5 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: 132,000 shares outstanding, selling for $57 per share; the beta is 1.11. Preferred stock: 18,000 shares of 6.5 percent preferred stock outstanding, currently selling for $106 per share. Market: 8.5 percent market risk premium and 6 percent risk-free rate. Assume the company's tax rate is 31 percent. What is the WAAC?

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 Evenflow Power Co., Debt: 6,000 8.5 percent coupon bonds outstanding,...

Consider the following information for Evenflow Power Co., Debt: 6,000 8.5 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. Common stock: 126,000 shares outstanding, selling for $63 per share; the beta is 1.09. Preferred stock: 19,000 shares of 7 percent preferred stock outstanding, currently selling for $105 per share. Market: 9.5 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...

You are looking at the following information: Debt: 3,500 5.5 percent coupon bonds outstanding, $1,000 par...

You are looking at the following information: Debt: 3,500 5.5 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: 73,500 shares outstanding, selling for $56 per share; the beta is 1.17. Preferred stock: 12,500 shares of 4.5 percent preferred stock outstanding, currently selling for $105 per share. Market: 6.5 percent market risk premium and 4 percent risk-free rate. The company is in the 32...

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