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

True or False. A company borrows additional financing and as a result their weight of debt increases (holding dollars of equity constant). Because the weight of debt increases, the company's WACC will always decrease. True O False

The IPO Investment Bank has the following financing outstanding. Debt: 20,000 bonds with a coupon rate of 12 percent and a current price quote of 110; the bonds have 20 years to maturity. 190, 000 zero coupon bonds with a price quote of 20.5 and 30 years until maturity. Both bonds have a par value of $1,000 and semiannual coupons. Preferred stock: 110,000 shares of 10 percent preferred stock with a current price of $85, and a par value of $100. Common stock: 2,200, 000 shares of common stock; the current price is $71, and the beta of the stock is 1.45. Market: The corporate tax rate is 21 percent, the market risk premium is 5 percent, and the risk - free rate is 2 percent. What is the WACC for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Suppose Westerfield Co. has the following financial information: Debt: 900, 000 bonds outstanding with a face value of $1,000. The bonds currently trade at 85% of par and have 12 years to maturity. The coupon rate equals 7%, and the bonds make semiannual interest payments. Preferred stock: 600,000 shares of preferred stock outstanding; currently trading for $108 per share, paying a dividend of $9 annually. Common stock: 25,000,000 shares of common stock outstanding; currently trading for $185 per share. Beta equals 1.22. Market and firm information: The expected return on the market is 9%, the risk - free rate is 5%, and the tax rate is 21 %. Calculate the weight of debt in the capital structure. (Enter percentages as decimals and round to 4 decimals)

Given the following information for Huntington Electric Co., *Debt: 6,000 of 8 percent coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling for 108 percent of par; the bonds make annual payments. *Preferred stock: 8000 shares of 7.2% preferred stock dividend rate, selling at $90 per share. *Common stock: 500,000 shares outstanding, selling for $70 per share; the beta is 1.12. *Market data: 10 percent market rate of return and 5 percent risk-free rate, and the corporate tax rate of 30%. What is the after tax, WACC of this company? What is the after-tax, WACC of this company? Group of answer choices .9.6639% 8% 9.9802% 10%

Warbler's Whistles Inc. capital structure includes the following. Bond A: 23,844 bonds with a 5.5% coupon rate, $1,000 par value, with 18.5 years to maturity, selling for $845.70; the bonds compound semiannually. Bond B: 8,680 bonds with a 0% coupon rate, $1,000 par value, with 6 years to maturity, selling for $790.10; the bonds compound semiannually. Common stock: 1,696,220 shares outstanding, selling for $47.28 per share; the beta is 1.4. The market return is currently 12.68%, and the U.S. T-bill currently returns 3.3%. If the tax rate is 21%, what is the company's weighted average cost of capital (WACC)?

Raghubhai