Problem 13-17 Preferred Stock and WACC The Saunders Investment Bank has...
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Accounting
Problem 13-17 Preferred Stock and WACC
| The Saunders Investment Bank has the following financing outstanding. |
| Debt: | 150,000 bonds with a coupon rate of 11 percent and a current price quote of 108.0; the bonds have 20 years to maturity. 320,000 zero coupon bonds with a price quote of 16.0 and 30 years until maturity. |
| Preferred stock: | 240,000 shares of 9 percent preferred stock with a current price of $67, and a par value of $100. |
| Common stock: | 3,500,000 shares of common stock; the current price is $53, and the beta of the stock is .90. |
| 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? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| WACC | % |
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