Reference no: EM132922877
Question - The Saunders Investment Bank has the following financing outstanding.
Debt: Preferred stock: Common stock: 150,000 bonds with a coupon rate of 11 percent and a current price quote of 108; the bonds have 20 years to maturity. 320,000 zero coupon bonds with a price quote of 16 and 30 years until maturity. Both bonds have a par value of $1,000. Assume semiannual compounding.
240,000 shares of 9 percent preferred stock with a current price of $67, and a par value of $100.
3,500,000 shares of common stock; the current price is $53, and the beta of the stock is .9.
Market: The corporate tax rate is 25 percent, the market risk premium is 8 percent, and the risk-free rate is 5 percent.
Required - What is the WACC for the company?
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