Question: Modi Corp has 1 , 4 0 0 , 0 0 0 shares outstanding, and the stock is currently trading at $ 1 6 .

Modi Corp has 1,400,000 shares outstanding, and the stock is currently trading at $16.00 per share. The company has two different bonds outstanding. First, it has 4,000 zero coupon bonds outstanding. Each zero coupon bond has a face value of $1,000, will mature in 10 years, and is currently priced at 70.00% of face value. Second, the company has 6,000 coupon paying bonds outstanding. Each coupon paying bond is currently priced at $880.00, and the YTM is 6.00%. You have decided to calculate the cost of equity using the SML equation. You have estimated that the risk-free rate is 3.00%, and the expected rate of return on the market portfolio is 10.00%. You also have estimated that the equity beta of the company is 2.10. Finally, the company faces a tax rate of 35.00%. Using the information given, calculate the cost of capital (WACC) of Modi Corp.

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