Perferred Stock and WACC The Saunders investment bank has the following financing outstanding.
What is the WACC for the company?
Debt: 60,000 bounds with coupon of 6 percent and a current price quote of 109.5: the bonds have 20 years to maturity. 230,000 zero coupon bonds with a price quote of 17.5 and 30 years until maturity.
Preferred Stock: 150,000 shares of 4 percent preferred stock with a current price of $79, and a par value of $100.
Common stock: 2,600,000 shares of common stock; the current price $65, and the beta of the stock is 1.15.
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?