Reference no: EM132460078
The Saunders Investment Bank has the following financing outstanding.
Debt:140,000 bonds with a coupon rate of 10 percent and a current price quote of 114.0; the bonds have 20 years to maturity. 310,000 zero coupon bonds with a price quote of 16.5 and 30 years until maturity. Both bonds have a par value of $1,000. Assume semiannual compounding.
Preferred stock: 230,000 shares of 8 percent preferred stock with a current price of $68, and a par value of $100.
Common stock: 3,400,000 shares of common stock; the current price is $54, and the beta of the stock is .95.
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?
The explanation to solving this would be great.