Given the following information for Lightening Power CO., find the weighted average cost of capital (WACC). Assume the company’s tax rate is 35%.

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Common stock: 310,000 shares outstanding, selling for $57 per share; the beta is 1.05.

Preferred stock: 15,000 shares of preferred stock outstanding, currently selling for $72 per share and annual dividend is $4 per share.

Market: 7% market risk premium and 4.5% risk-free rate

Market value of 6% bond = 4000*105.86 = 423440 = 0.0205Market value of 7.50% bond = 3500*114.52 = 400820 = 0.0216Market value of common stock = 310000*57 = 17670000 = 0.9027Market value of…

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