Question

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; the bonds have 20 years to maturity. 190,000 zero coupon bonds with a price quote of 19.5 and 30 years until maturity. Assume semiannual compounding.
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. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

  

WACC

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Answer 1

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