Preferred stock-common stock and debt

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Reference no: EM13932886

Information on Marshall Power Co., is shown below. Assume the company’s tax rate is 35 percent.

Debt: 8,500 7.2 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 118 percent of par; the bonds make semiannual payments.

Common stock: 225,000 shares outstanding, selling for $87 per share; beta is 1.15.

Preferred stock: 15,000 shares of 4.8 percent preferred stock outstanding, currently selling for $98 per share.

Market: 7 percent market risk premium and 3.1 percent risk-free rate.

Calculate the company's WACC.

Reference no: EM13932886

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