Given the following information for Electric Transport, find...

Given the following information for Electric Transport, find the company's tax rate is 21 percent. Debt: 8,100, 6.9 percent coupon bonds outstanding, $1,000 par value, 17 years to maturity, selling for 101 percent of par, the bonds make semiannual payments. Common stock: 175,000 shares outstanding, selling for $77 per share, beta is 1.32 Preferred stock: 9,000 shares of $7.50 preferred stock outstanding, currently selling for $73 per share. Market: 7.9 percent market risk premium and 3.6 percent risk-free rate. Multiple Choice 10.4% 12.0% 12.4% 10.7% 9.8%

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00:01 The weight average cost of capital to calculate w a c c for i wrote that enterprises follow these steps first calculate the cost of depth the cost of depth is given as 7 % since the bonds are selling for 105 .25 unit n is equal to 25 years pmt 3 .5 and fa is 1000 pv is equal to minus 1 .05 25 use a financial calculator or spreadsheet to find the ymt the ymt is approximately it is approximately 3 .17 percentage ymt is 3 .17 percentage and second calculate the cost of equity second calculate the cost of equity d1 is given to k.

01:17 E is equal to d 1 divided by p 0 plus g by substituting values in the formula we get 0 .04 9 2 3 plus 0 .0 05 is equal to 0 .0 9 9 2 3 or 9 point 9 2 percentage third step calculate the cost of preferred stock the cost of preferred stock is given as 0 .5 percent preferred stock is typically considered perpetually so you can use the following formula k p s is equal to preferred stock dividend divided by preferred stock price that is equal to 4 .5 percentage divided by 100 that is equal to 0 .0 for 5 fourth step calculate weights of each component to calculate the weights of each component market value of preferred stock is equals market value of preferred stock is close to number of preferred shares into preferred stock price that is equal to 8500 into dollar ninety four point five zero that is close to dollar eight hundred and three to 15 and fifth step calculate wacc using the formula wacc is consumed wd into kd plus w e into k e plus w p s into k p s is substituting the values we get wacc is close to 999 875 divided by 99875 plus 16 to 5 0 0 0 0 plus 8 and 3 to 15 to 0 point 0 3 1 7 plus 16 thousand to 50 thousand less divided by 999875 plus 16 to 50 0 0 0 plus 8 not 3 to 15 to 0 point 0 9 9 2 3 plus 803 to 50 divided by 9 9 plus 16 to 50 plus 8 and 3 to 15 to 0 point 0 4 5 calculate the wacc by calculating all this we get 0 point 1 0 0 5 9 9 1 3 our wacc is equals to approximately 10 .06 percentage...

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