What is the wacc for the company

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Question:

The Saunders Investment Bank has the following financing outstanding. What is the WACC for the company?

Debt:

60,000 bonds with a coupon rate of 6 percent and a current price quote of 109.5; the bonds have 20 years to maturity. 230,000 zero coupon bonds with a price quote of 17.5 and 30 years until maturity.Preferred Stock:150,000 shares of 4 percent preferred stock with a current price of $79, and a par value of $100.Common Stock:2,600,000 shares of common stock; the current price is $65, and the beta of the stock is 1.15.Market:

The corporate tax rate is 40 percent, the market risk premium is 7 percent, and the risk-free rate is 4 percent.

Reference no: EM132433973

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