Finding the WACC. Given the following information for Janicek Power Co., find the WACC. Assume the company’s tax rate is 35 percent.
Debt: 8,500 7.2 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 118 percent of par; the bonds make semi annual payments.
Common stock: 225,000 shares outstanding, selling for $87 per share; beta is 1.15.
Preferred stock: 15,000 shares of 4.8 percent preferred stock outstanding, currently selling for $98 per share.
Market: 7 percent market risk premium and 3.1 percent risk-free rate