Information on Gerken Power Co., is shown below. Assume the company's tax rate is 38%. Debt: 8,800

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Information on Gerken Power Co., is shown below. Assume the company's tax rate is 38%.

Debt: 8,800 8.1% coupon bonds outstanding, $1,000 par value, selling for 103.5% of par, and YTM OF 7.7%.

Common Stock: 213,000 shares outstanding, selling for $83.30 per share; beta is 1.18.

Preferred Stock: 12,300 shares of 5.9% preferred stock outstanding, currently selling for $97.70 per share.

Market: 7.15% market risk premium and 4.95% risk-free rate.

A. What is the market value of the firm?

B. What is the company's cost of each form of financing?

C. Calculate the company's WACC?

Related Book For answer-question

Essentials of Corporate Finance

ISBN: 978-1259277214

9th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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Posted Date: Mar 08, 2024 06:42 AM

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Information on Gerken Power Co., is shown below. Assume the company's tax rate is 38%. Debt: 8,800

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A To find the market value of the firm we need to calculate the market value of each component of th... View the full answer

Essentials of Corporate Finance

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