Question

Given the following information for Lightning Power Co., find the WACC. Assume the company’s tax rate is 35 percent.

Debt: 8,000 6.5 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 106 percent of par; the bonds make semiannual payments.
Common stock: 310,000 shares outstanding, selling for $57 per share; the beta is 1.05.
Preferred stock: 15,000 shares of 4 percent preferred stock outstanding, currently selling for $72 per share.
Market: 7 percent market risk premium and 4.5 percent risk-free rate.



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  • CreatedMarch 13, 2014
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