Problem 12 15 Finding the WACC LO 3 Information on Gerken Power Co , is shown below Assume the companys tax rate is 38 percent Debt 9,300 8 3 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 101 percent of par the bonds make semiannual payments Common stock 218,000 shares outstanding, selling for $83 80 per share beta is 1 23 Preferred stock 12,800 shares of 5 9 percent preferred stock outstanding, currently selling for $97 20 per share Market 7 15 percent market risk premium and 4 95 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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Question: Problem 12-15 Finding the WACC [LO 3] Information on Gerken Power Co., is shown below. Assume the companys tax rate is 38 percent. Debt: 9,300

Problem 12-15 Finding the WACC [LO 3]

Information on Gerken Power Co., is shown below. Assume the companys tax rate is 38 percent.

Debt:		9,300 8.3 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 101 percent of par; the bonds make semiannual payments.

Common stock:		218,000 shares outstanding, selling for $83.80 per share; beta is 1.23.

Preferred stock:		12,800 shares of 5.9 percent preferred stock outstanding, currently selling for $97.20 per share.

Market:		7.15 percent market risk premium and 4.95 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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