You are given the following information for Lighting Power Company. Assume the company's tax rate is 21 percent. Debt: Common stock: Preferred stock: Market: 6,000 5.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. 390,000 shares outstanding, selling for $57 per share; the beta is 1.14. 16,500 shares of 3.3 percent preferred stock outstanding, a $100 par value, currently selling for $78 per share. 5 percent market risk premium and 4.3 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 %

You are given the following information for Lighting Power Company. Assume the company's tax rate is 21 percent. Debt: Common stock: Preferred stock: Market: 6,000 5.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. 390,000 shares outstanding, selling for $57 per share; the beta is 1.14. 16,500 shares of 3.3 percent preferred stock outstanding, a $100 par value, currently selling for $78 per share. 5 percent market risk premium and 4.3 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 %

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 %
You are given the following information for Lighting Power Company. Assume the company's tax rate is 25 percent. Debt: Common stock: 430,000 shares outstanding, selling for $61 per share; the beta is 1.12. 18,500 shares of 3.7 percent preferred stock outstanding, a $100 par value, currently selling for $82 per share. 6 percent market risk premium and 4.7 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.) Preferred stock: Market: 10,000 5.9 percent coupon bonds outstanding. $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. WACC %
Given the following information of Electric Transport Debt value: $75,000. Debt information: 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for $1,030, the bonds make annual payments Equity value: $175,000. Equity information: Beta is 1.21, Market return is 13.1%, and Risk-free rate is 5.1% Assume the company's tax rate is 40%. Calculate the WACC for this firm. 11.80% 12.78% 7.48% 9.19%
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A company currently has a bond outstanding that pays 6% coupon rate (coupons paid semiannually), a $1,000 par value and matures in 30 years. The bond is currently trading at $515.16. The company's tax rate is 25%. What is the firm's after-tax component cost of debt for purposes of calculating the weighted average cost of capital ("WACC")? Please show formulas, step by step instructions (without a financial calculator or Excel)
The following is the information on debt issued by Huntington Power Co. Calculate the after-tax cost of debt for the firm. Debt: 4 percent coupon paid semiannually, $1,000 par value, 15 years to maturity, current market price of the bond is $889.0. Tax rate is 20%.
A company has an outstanding bond issue with a 7.75% coupon, paid semiannually, a current maturity of 20 years, and it sells for $967.97. The firm's income tax rate is 40%, What should the firm's managers use as an after-tax cost of debt for cost of capital purposes? 4.85% 2.42% 8.08% 4.04 %
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