Consider the following information for Evenflow Power Co.,
Debt: 4,000 7 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 103 percent of par; the bonds make semiannual payments.
Common stock: 92,000 shares outstanding, selling for $56 per share; the beta is 1.15.
Preferred stock: 12,500 shares of 6.5 percent preferred stock outstanding, currently selling for $105 per share.
Market: 7.5 percent market risk premium and 6.5 percent risk-free rate. Assume the company's tax rate is 33 percent.
Required:
Find the WACC. (Do not round your intermediate calculations.)
- 10.28%
- 10.75%
- 10%
- 9.78%
- 9.88%