Risk-free rate and market risk premium

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Reference no: EM131617525

Consider the following information for Evenflow Power Co., Debt: 3,500 6 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. Common stock: 77,000 shares outstanding, selling for $65 per share; the beta is 1.09. Preferred stock: 12,000 shares of 5 percent preferred stock outstanding, currently selling for $106 per share. Market: 7 percent market risk premium and 5 percent risk-free rate. Assume the company's tax rate is 35 percent.

Find the WACC.

A. 9.02

B. 8.7

C. 8.2

D. 8.3

E. 8.45

Reference no: EM131617525

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