The following information may be relevant for determining the weighted average cost of capital for the Huntington Power Company:
information on equity: 175,000 shares outstanding, trading at $58 per share, w/ a of 1.10 information on debt: 5,000 6 percent coupon bonds in circulation, w/ a par value of $1,000, maturing in 25 years, trading at 105 percent of par economic information: 7 percent market-risk premium, 5 percent risk-free rate, 35 percent tax rate.
Assume you've determined that the Huntington Power Company's required return to equity investors is 12.7 percent, and their required return to debt investors is 5.50 percent. In addition, assume you've determined that the company's capital structure is 66 percent equity, 34 percent debt.
What is the WACC appropriate for evaluating Huntington Power's scale-enhancing investment projects?