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The Saunders Investment bank has the following financing outstanding. Debt: 70,000 bonds with a coupon rate of 10 percent and a current price quote of 110; the bonds have 20 years to maturity. 240,000 zero coupon bonds with a price quote of 20 and 30 years until maturity. Assume semiannual compounding. Preferred stock: 160,000 shares of 8 percent preferred stock with a current price of $75, and a par value of $100. Common stock: 2,700,000 shares of common stock; the current price is $61, and the beta of the stock is 1.3. Market: The corporate tax rate is 25 percent, the market risk premium is 8 percent, and the risk-free rate is 5 percent. What is the WACC for the company?

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Financial Management, Finance

Category:- Financial Management
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