Given the following information for Lightning Power Co., find the WACC. Assume the company’s 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.
WACC = Kd x Pd + Kpfd x Kpfd + Ke x Pe
The proportions, costs and weighted costs are in decimals to 4 places
Source Market Value Market Proportions Costs Weighted Costs Debt $ .0122 Preferred 1,080,000 Equity .6489 Total ? WACC = ?