Question
The Saunders Investment Bank has the following financing outstanding. Debt: 100,000 bonds with a coupon rate of 6 percent and a current price quote of
The Saunders Investment Bank has the following financing outstanding.
Debt: | 100,000 bonds with a coupon rate of 6 percent and a current price quote of 108.0; the bonds have 20 years to maturity. 270,000 zero coupon bonds with a price quote of 18.5 and 30 years until maturity. |
Preferred stock: | 190,000 shares of 4 percent preferred stock with a current price of $72, and a par value of $100. |
Common stock: | 3,000,000 shares of common stock; the current price is $58, and the beta of the stock is 1.15. |
Market: | The corporate tax rate is 30 percent, the market risk premium is 5 percent, and the risk-free rate is 2 percent. |
What is the WACC for the company?
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