Information concerning wayne-martin electric

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CALCULATING WACC You are given the following information concerning Wayne-Martin Electric (WME):

Debt: 8,000 6.5 percent coupon bonds outstanding, with 25 years to maturity, and a quoted price of 106 (106% of face value). These bonds pay interest semiannually.

Common stock: 310,000 shares of common stock selling for $57 per share. The stock has a beta of 1.35. WME has a current outstanding dividend of $4.25 and will pay a dividend of $4.50 next year. The dividend is expected to grow by 5 percent per year indefinitely.

Preferred stock: 15,000 shares of 4 percent of $100 par preferred stock, selling at $72 per share.

Market: a 7 percent market risk premium, a 4.5 percent risk-free rate, and a 40 percent tax rate.

Reference no: EM132288888

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