Preferred stock and wacc the saunders investment bank

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Preferred Stock and WACC The Saunders Investment Bank has the following financing out- standing. What is the WACC for the company? 

Debt: 40,000 bonds with a 7 percent coupon rate and a current price quote of 87.50. The bonds have 19 years to maturity. 170,000 zero coupon bonds with a price quote of 6.85 and 29 years until maturity. 

Preferred Stock: 
1 10,000 shares of 7.25 percent preferred with a current price of $107 and a par value of $100. 

Common Stock: 
1,600,000 shares of common stock. The current price is $72, and the beta of the stock is 1.2. 

Market: 
The corporate tax rate is 40 percent, the market risk premium is 7.5 percent, and the risk-free rate is 6.5 percent. 

Reference no: EM13560469

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