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The Saunders Investment Bank has the following financing outstanding. Debt: 160,000 bonds with a coupon rate of 12 percent and a current price quote of
The Saunders Investment Bank has the following financing outstanding.
Debt: | 160,000 bonds with a coupon rate of 12 percent and a current price quote of 113; the bonds have 20 years to maturity. 330,000 zero coupon bonds with a price quote of 15.5 and 30 years until maturity. Both bonds have a par value of $1,000. Assume semiannual compounding. |
Preferred stock: | 250,000 shares of 10 percent preferred stock with a current price of $66, and a par value of $100. |
Common stock: | 3,600,000 shares of common stock; the current price is $52, and the beta of the stock is .85. |
Market: | The corporate tax rate is 40 percent, the market risk premium is 7 percent, and the risk-free rate is 4 percent. |
What is the WACC for the company?
*Please respond with Excel formulas! Thank you!
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