You are given the following information for Lightning Power Company. Assume the company's tax rate is 21 percent.Debt:Common stock:Preferred stock:Market:16,000 6.5 percent coupon bonds outstanding, $1,000 par value, 27 yearsto maturity, selling for 105 percent of par; the bonds make semiannualpayments.490,000 shares outstanding, selling for $67 per share; beta is 1.18.21,500 shares of 4.3 percent preferred stock outstanding, a $100 parvalue, selling for $88 per share.6 percent market risk premium and 5.4 percent risk-free rate.What is the company's WACC?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.Answer is complete but not entirely correct.WACC8.53%

Step 1:First, the market value of all the debts and equity are computed,Then the weights are…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are given the following information for Lightning Power Co. Assume the company's tax rate is 24 percent. Debt: 19,000 6.8 percent coupon bonds outstanding, $1,000 par value, 24 years to maturity, selling for 111 percent of par; the bonds make semiannual payments. Common 520,000 shares outstanding, selling for $70 per share; beta is 1.21. stock: Preferred stock: 23,000 shares of 4.6 percent preferred stock outstanding, currently selling for $91 per share. The par value is $100 per share. Market: 6 percent market risk premium and 5.5 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 22 percent. 17,000 6.6 percent coupon bonds outstanding, $1,000 par value, 26 years to maturity, selling for 106 percent of par; the bonds make semiannual payments. Debt: Common 500,000 shares outstanding, selling for $68 per share; the beta is 1.19. stock: 22,000 shares of 4.4 percent preferred stock outstanding, a $100 par value, currently selling for $89 per share. Preferred stock: Market: 7 percent market risk premlum and 5.5 percent risk-free rate. What is the company's WACC? (Do not round Intermedlate 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 Lightning Power Co. Assume the company’s tax rate is 21 percent. Debt: 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. Common stock: 390,000 shares outstanding, selling for $57 per share; beta is 1.14. Preferred stock: 16,500 shares of 3.3 percent preferred stock outstanding, currently selling for $78 per share. The par value is $100 per share. Market: 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.)
You are given the following information for Lightning Power Co. Assume the company's tax rate is 22%. Debt: 12000, 6.1% coupon bonds outstanding, $1,000 par value, 27 years to maturity, selling for 109% of par. The bonds make semiannual payments. Common stock: 450,000 shares outstanding selling for $63 per share. The beta is 1.14 Preferred stock: 19,500 shares of 3.9% preferred stock outstanding, currently selling for $84 per share. The Par value is $100 per share. Market: 5% market risk premium and 4.9% risk free rate. What is the company's WACC?
You are given the following information for Watson Power Co. Assume the company's tax rate is 22 percent. Debt: 22,000 7,1 percent coupon bonds outstanding. $1,000 par value, 21 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. Common stock: 550,000 shares outstanding, selling for 573 per share, the beta is 1.17. Preferred stock: 24, 500 shares of 4.9 percent preferred stock outstanding, currently selling for $94 per share. The par value is $100 per share. Market: 6 percent market risk premium and 5.2 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.)
You are given the following information for Lighting Power Company. Assume the company's tax rate is 25 percent. Debt: 25,000 7.4 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 106 percent of par; the bonds make semiannual payments. Common stock: 580,000 shares outstanding, selling for $76 per share; the beta is 1.15. Preferred stock: 26,000 shares of 5.2 percent preferred stock outstanding, a $100 par value, currently selling for $97 per share. Market: 6 percent market risk premium and 4.8 percent risk- free rate. What is the company's WACC? (Do not round
You are given the following information for Lighting Power Company. Assume the company’s tax rate is 25 percent. Debt: 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. Common stock: 430,000 shares outstanding, selling for $61 per share; the beta is 1.12. Preferred stock: 18,500 shares of 3.7 percent preferred stock outstanding, a $100 par value, currently selling for $82 per share. Market: 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.)
Information on Lightning Power Co., is shown below. Assume the company’s tax rate is 24 percent. Debt: 17,400 6.5 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. Common stock: 580,000 shares outstanding, selling for $83.25 per share; beta is 1.20. Preferred stock: 24,500 shares of 4.45 percent preferred stock outstanding, currently selling for $91.90 per share. The par value is $100. Market: 6.2 percent market risk premium and 2.7 percent risk-free rate. What is the company's cost of each form of financing? A) Cost of equity B) Aftertax cost of debt C) Cost of preferred stock Calculate the company's WACC. WACC %
You are given the following information for Watson Power Co. Assume the company's tax rate is 25 percent. Debt: 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. Common stock: 430,000 shares outstanding, selling for $61 per share; the beta is 1.12. Preferred stock:18,500 shares of 3.7 percent preferred stock outstanding, currently selling for $82 per share. The par value is $100 per share. Market: 6 percent market risk premium and 4.7 percent risk-free rate. What is the company's WACC?
Given the following information for Dicey Corporation, find the WACC. Assume the company's tax rate is 21 percent. Debt: 10000 corporate bonds, 7.6 percent coupon bonds outstanding. S1,000 par valuc, 18 years to maturity, selling for 102 percent of par, the bonds make semiannual payments. Common stock: 300,000 shares outstanding, selling for $58 per share, beta is 1.36. Preferred stock: 6,000 shares of $8.50 preferred stock outstanding, currently selling for $73 per share. Market: 8.3 percent market risk premium and 3.5 percent risk-free rate. Answer: WACC =
You are given the following information for Tara Ita Power Co. Assume the company’s tax rate is 22 percent. Debt: 5,000 6.6 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 109 percent of par; the bonds make semiannual payments. Common stock: 380,000 shares outstanding, selling for $56 per share; the beta is 1.12. Market: 5 percent market risk premium and 4.6 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.)
Information on Gerken Power Co., is shown below. Assume the company’s tax rate is 34 percent. Debt: 8,600 7.9 percent coupon bonds outstanding, $1,000 par value, 24 years to maturity, selling for 104.5 percent of par; the bonds make semiannual payments. Common stock: 211,000 shares outstanding, selling for $83.10 per share; beta is 1.16. Preferred stock: 12,100 shares of 5.8 percent preferred stock outstanding, currently selling for $97.90 per share. Market: 7.05 percent market risk premium and 4.85 percent risk-free rate. Required:Calculate 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 %

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