Information on Lightning Power Co., is shown below. Assume the company’s tax rate is 24 percent.
17,400 6.5 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semiannual payments.
24,500 shares of 4.45 percent preferred stock outstanding, currently selling for $91.90 per share. The par value is $100.
What is the company's cost of each form of financing?
A) Cost of equity
B) Aftertax cost of debt
C) Cost of preferred stock
Calculate the company's WACC.
WACC %
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