Preferred Stock and WACC The Saunders Investment Bank has the following financing outstand...

Debt:

40,000 bonds with a 7 percent coupon rate and a current price quote of 119.80; the bonds have 25 years to maturity. 150,000 zero coupon bonds with a price quote of 18.2 and 30 years until maturity

Preferred stock:

100,000 shares of 4 percent preferred stock with a currentprice of $78, and a par value = $100.

Common stock:

1,800,000 shares of common stock; the current price is $65, and the beta of the stock is 1.1

Market:

premium is 7 percent, and the risk-free rate is 4 percent.