You are given the following information for Watson Power Co. Assume the company’s tax rate is 40 percent.
Debt: 10,000 6 percent coupon bonds outstanding, $1,000 par value, 15 years to maturity, selling for 105 percent of par; the bonds make semiannual payments.
Common stock: 300,000 shares outstanding, selling for $50 per share; the beta is 1.50.
Preferred stock: 15,000 shares of 10 percent preferred stock outstanding, currently selling for $100 per share.
Market: 10 percent market risk premium and 6 percent treasure bill rate.
What is the company's WACC?
With each step written