$103$

$15.$ Finding the WACC. Given the following information for Gerken Power Co$.,$ find the WACC. Assume the company's tax rate is $35$ percent.

Debt:

Common stock:

Preferred stock:

Market:

$15,5006\mathrm{.}4$ percent coupon bonds outstanding, $$1,000$ par value, $25$ years to maturity, selling for $108$ percent of par; the bonds make semiannual payments.

$495,000$ shares outstanding, selling for $$81$ per share; beta is $1\mathrm{.}20.$

$20,000$ shares of $4\mathrm{.}2$ percent preferred stock outstanding, currently selling for $$92$ per share.

$7$ percent market risk premium and $3\mathrm{.}1$ percent riskfree rate.