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Find market value of sources of financing

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Reference no: EM132684908

Given the following information for Lightning Power, find the WACC. Assume thetax rate is 35 percent.

Debt: 2,500 7.75 percent coupon bonds outstanding, RM1,000 par value, 8 years to maturity, selling for 103 percent of par; the bonds make annual payments.

Common Stock: 75,000 shares outstanding selling for RM50 per share, the beta is 0.85.

Preferred Stock: 10,000 shares of 5 percent preferred stock outstanding, currently selling for RM80 per share.

Market: 5 percent market risk premium and 6 percent risk-free rate.

Hints: First, find market value (MV) of these sources of financing (MVDebt; MVEquity; and MVPreferred Stock), then calculate the value of the firm (V). You also need to calculate YTM for the bond.

Reference no: EM132684908

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