You are given the following information for Cleen Power Co. Assume the company’s tax rate is 40 percent.
Debt: 5,000 7.8 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 107 percent of par; the bonds make semiannual payments.
Common stock: 500,000 shares outstanding, selling for $68 per share; the beta is 1.11. Market: 9 percent market risk premium and 5.8 percent risk-free rate.
What is the company’s WACC?
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