Problem 15 (Use the spreadsheet provided on canvas or on Connect)

Given the following information for Lightning Power Co., find the WACC. Assume the companys 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.

Source	Market Value	Market Proportions	Costs	Weighted Costs
Debt	8,480,000			.0122
Preferred	1,080,000
Equity	17,670,000	.6489
Total	27,230,000		WACC =

Find the market proportions, costs, weighted costs, and WACC.