Finding the WACC Given the following information for Fairview Co., find the WACC. Assume the company’s tax rate is 35 percent.
Debt: 7,000 8 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 104 percent of par; the bonds make semiannual payments.
Common stock: 120,000 shares outstanding, selling for $82 per share; the beta is 1.20.
Preferred Stock: 10,000 shares of 5.25 percent preferred stock outstanding, currently selling for $80 per share.
Market: 7 percent market risk premium and 4.5 percent risk-free rate.