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Consider the following information for Watson Power Company: Debt: 3, 500 8 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: 80, 500 shares outstanding, selling for $59 per share; the beta is 1.09. Preferred stock: 12, 000 shares of 7.5 percent preferred stock outstanding, currently selling for $107 per share. Market: 9.5 percent market risk premium and 7 percent risk - free rate. Assume the company's tax rate is 35 percent. Find the WACC

Consider the following information for Watson Power Company: Debt: 3, 500 8 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: 80, 500 shares outstanding, selling for $59 per share; the beta is 1.09. Preferred stock: 12, 000 shares of 7.5 percent preferred stock outstanding, currently selling for $107 per share. Market: 9.5 percent market risk premium and 7 percent risk - free rate. Assume the company's tax rate is 35 percent. Find the WACC

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Consider the following information for Watson Power Company: Debt: 3, 500 8 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: 80, 500 shares outstanding, selling for $59 per share; the beta is 1.09. Preferred stock: 12, 000 shares of 7.5 percent preferred stock outstanding, currently selling for $107 per share. Market: 9.5 percent market risk premium and 7 percent risk - free rate. Assume the company's tax rate is 35 percent. Find the WACC.
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