Explore BrainMass

Explore BrainMass

    Finding the WACC

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Given the following information for Janicek Power Co., find the WACC. Assume the company's tax rate is 35%.

    Debt: 5,000 8 % coupon bonds outstanding, $1000 par value, 10 years to maturity, selling for 96% of par; the bonds make semiannual payments.

    Common stock: 60,000 shares outstanding, selling for $75 per share; beta is 1.10.

    Preferred stock: 9,000 shares of 5.5 percent preferred stock outstanding, currently selling for $60 per share.

    Market: 8% market risk premium and 6% risk-free rate.

    © BrainMass Inc. brainmass.com November 24, 2022, 11:31 am ad1c9bdddf

    Solution Preview

    An approximation to the cost of debt= k = {C(1-T) + (F-P)/n}/(P+F)/2
    C= coupon payment
    T= Tax rate
    F= Face Value
    P= Current ...

    Solution Summary

    WACC has been calculated using data on bonds, common stock and preferred stock.