You are given the following information for Huntington Power Company. Assume the company's tax rate is 25 percent. Debt: Common stock: Market: 30,000 4.9 percent coupon bonds outstanding, $2,000 par value, 25 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. 470,000 shares outstanding, selling for $76 per share; the beta is 1.10. 6 percent market risk premium and 4.1 percent risk-free rate. What is the company's WACC?

You are given the following information for Huntington Power Company. Assume the company's tax rate is 25 percent. Debt: Common stock: Market: 30,000 4.9 percent coupon bonds outstanding, $2,000 par value, 25 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. 470,000 shares outstanding, selling for $76 per share; the beta is 1.10. 6 percent market risk premium and 4.1 percent risk-free rate. What is the company's WACC?

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

Problem 1PS

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You are given the following information for Cleen Power Co. Assume the company’s tax rate is 30 percent. Debt: 6,000 7.9 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 108 percent of par; the bonds make semiannual payments. Common stock: 510,000 shares outstanding, selling for $69 per share; the beta is 1.12. Market: 10 percent market risk premium and 5.9 percent risk-free rate. What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %
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