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Debt: 5,500 7.5 percent coupon bonds outstanding, $1,000 parvalue, 21 years to maturity, selling for 105 percent of par; thebonds make semiannual payments. Common stock: 132,000 sharesoutstanding, selling for $57 per share; the beta is 1.11. Preferredstock: 18,000 shares of 6.5 percent preferred stock outstanding,currently selling for $106 per share. Market: 8.5 percent marketrisk premium and 6 percent risk-free rate. Assume the company's taxrate is 31 percent. What is the WAAC?
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