A corporation has two issues of bonds, Financial Management

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A corporation has two issues of bonds

A corporation has two issues of bonds outstanding:

1. Time to maturity (years):10 Outstanding principal (million $):100 Coupon (%):5 YTM (%): 8

2. Time to maturity (years:):20 Outstanding principal (million $):300 Coupon (%):7 YTM (%):9

They also have 30 million shares of common stock outstanding. The stock is currently trading at $18 per share. The company’s beta is 1.3, the risk free rate 2%, and the market risk premium 7%. Their marginal corporate tax rate is 35%. Calculate the corporation's WACC.

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Financial Management: A corporation has two issues of bonds

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Financial Management: A corporation has two issues of bonds

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