CASE 2: COST OF CAPITAL
Given the following information for Huntington Power, find the WACC. Assume the company’s tax rate is 28%.
• Debt: 40.000 with 7% coupon bond outstanding, $100 par value, 20 years to maturity, selling for 103% of par; the bonds make semi-annual payments
• Equity: 90.000 shares outstanding selling for $57 per share; the beta is 1,10
• Market: 8% market risk premium and 6% risk free rate