What is the company cost of each form of financing

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Reference no: EM132505248

Information on Lightning Power Co., is shown below.

Assume the company's tax rate is 23 percent.

Debt:18,300 6.2 percent coupon bonds outstanding, $1,000 par value, 26 years to maturity,

selling for 107.9 percent of par;

the bonds make semiannual payments.

Common stock:625,000 shares outstanding, selling for $85.50 per share; beta is 1.20.

Preferred stock:29,000 shares of 4.3 percent preferred stock outstanding, currently selling for $92.80 per share.

The par value is $100.

Market:7.1 percent market risk premium and 3.3 percent risk-free rate.

Question 1: What is the company's cost of each form of financing? cost of equity? aftertax cost of debt? cost of perfered stock? Calulate WACC?

Reference no: EM132505248

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