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# Preferred Stock and WACC The Saunders Investment Bank 15. has the following financing outstanding. What is the WACC for the company? Debt: Preferred...

This question was created from week 7 fin https://www.coursehero.com/file/15768407/week-7-fin/

I'm not sure how to put together the WACC formula using the information that is provided.

15. Preferred Stock and WACC The Saunders Investment Bank
has the following ﬁnancing outstanding. What is the WACC for the company? Debt: Preferred stock: Common stock: Market: 50,000 bonds with an 8 percent coupon rate and a quoted price of 1 19.80; the bonds have 25 years to maturity. 150,000 zero coupon
bonds with a quoted price of 13.85 and 30 years until maturity.
120,000 shares of 6.5 percent preferred with a current price of \$1 12,
and a par value = \$100. 2,000,000 shares of common stock; the current price is \$65, and the
beta of the stock is 1.1. The corporate tax rate is 40 percent, the market risk premium is 9
percent, and the risk-ﬂee rate is 4 percent.

• I found this question as it was very similar to one that I was working on for my class and needed the assistance with the different steps in finding the WACC. I followed your steps and got the answer for the sample question but when I enter the values for my question I get an incorrect result.
• raf_25
• Aug 04, 2018 at 3:57pm
• Hello. Remember, do not round your intermediate answers. If you round the answers, round them to 6 decimal places.
• bfacenjoro
• Aug 04, 2018 at 4:00pm
• I'm not rounding my intermediate answers and I'm still not getting the correct answer when I substitute the values from my problem. My question uses all the same wording but different values.
• raf_25
• Aug 05, 2018 at 12:02pm

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