The Saunders Investment Bank has the following financing outstanding.
Debt: 110,000 bonds with a coupon rate of 7 percent and a current price quote of 109.5; the bonds have 20 years to maturity. 280,000 zero coupon bonds with a price quote of 18 and 30 years until maturity. Assume semiannual compounding.
Preferred stock: 200,000 shares of 5 percent preferred stock with a current price of $71, and a par value of $100.
Common stock: 3,100,000 shares of common stock; the current price is $57, and the beta of the stock is 1.1.
Market: The corporate tax rate is 25 percent, the market risk premium is 8 percent, and the risk-free rate is 5 percent.
What is the WACC for the company?
The Saunders Investment Bank has the following financing outstanding.
Debt: 110,000 bonds with a coupon rate of 7 percent and a current price quote of 109.5; the bonds have 20 years to maturity. 280,000 zero coupon bonds with a price quote of 18 and 30 years until maturity. Assume semiannual compounding.
Preferred stock: 200,000 shares of 5 percent preferred stock with a current price of $71, and a par value of $100.
Common stock: 3,100,000 shares of common stock; the current price is $57, and the beta of the stock is 1.1.
Market: The corporate tax rate is 25 percent, the market risk premium is 8 percent, and the risk-free rate is 5 percent.
What is the WACC for the company?
Related questions
The Saunders Investment Bank has the following financing outstanding.
| Debt: | 120,000 bonds with a coupon rate of 8 percent and a current price quote of 110; the bonds have 20 years to maturity. 290,000 zero coupon bonds with a price quote of 17.5 and 30 years until maturity. Assume semiannual compounding.
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| The Saunders Investment Bank has the following financing outstanding. |
| Debt: | 20,000 bonds with a coupon rate of 10 percent and a current price quote of 108.0; the bonds have 20 years to maturity. 190,000 zero coupon bonds with a price quote of 19.5 and 30 years until maturity. |
| Preferred stock: | 110,000 shares of 8 percent preferred stock with a current price of $83, and a par value of $100. |
| Common stock: | 2,200,000 shares of common stock; the current price is $69, and the beta of the stock is 1.35. |
| Market: | The corporate tax rate is 40 percent, the market risk premium is 7 percent, and the risk-free rate is 4 percent. |
| What is the WACC for the company? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| WACC | % |
