The Saunders Investment Bank has the following financing outstanding. Debt: 47,000 bonds with a coupon rate of 5.2 percent and a current price quote of 105.5; the bonds have 16 years to maturity and a par value of $1,000. 16,300 zero coupon bonds with a price quote of 25.3, 25 years until maturity, and a par value of $10,000. Both bonds have semiannual compounding. Preferred stock: 142,000 shares of 3.7 percent preferred stock with a current price of $89 and a par value of $100. Common stock: 2,040,000 shares of common stock; the current price is $79 and the beta of the stock is 1.15. Market: The corporate tax rate is 22 percent, the market risk premium is 7.2 percent, and the risk-free rate is 3.2 percent. What is the WACC for the company?
The Saunders Investment Bank has the following financing outstanding. Debt: 47,000 bonds with a coupon rate of 5.2 percent and a current price quote of 105.5; the bonds have 16 years to maturity and a par value of $1,000. 16,300 zero coupon bonds with a price quote of 25.3, 25 years until maturity, and a par value of $10,000. Both bonds have semiannual compounding.
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