Question
Sanoma Bean is evaluating a new line of mixed nuts. Sanomas beta is estimated to be 1.71, they have 6,000,000 outstanding shares that currently trade
Sanoma Bean is evaluating a new line of mixed nuts. Sanomas beta is estimated to be 1.71, they have 6,000,000 outstanding shares that currently trade for a price of 32.88. Sanoma issued zero-coupon bonds 7 years ago; currently, the bonds have 15 years left to maturity. The quoted price for these bonds is 75.09 and face value is $2,000 per bond. The total face value outstanding of these bonds is $7,000,000. The expected return to the S&P 500 is currently 7.13% and the risk-free rate is 2.16%. Find the WACC for the company if the tax rate is 34.2%. Assume annual compounding if relevant.
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