What is the wacc for the company

Reference no: EM133249348

Question - The IPO Investment bank has the following financing outstanding.

Debt: 20, 000 bonds with a coupon rate of 12 percent and a current price quote of 110; the bonds have 20 years to maturity. 190,000 zero coupon bonds with a price quote of 20.5 and 30 years until maturity. Both bonds have a par value of $1,000 and semiannual coupons.

Preferred stock: 110,000 shares of 0 percent preferred stock with a current price of $85, and a par value of $100.

Common stock: 2,200 shares of common stock; the current price is $71, and the beta of the stock is 1.45.

Market: the corporate tax rate is 21 percent, the market risk premium is 5 percent, and the risk-free ate is 2 percent.

Required - What is the WACC for the company?

Reference no: EM133249348

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