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1. A newspaper listing of bond prices has an Asked yield column. This yield is based on the asked price and represents the: a. coupon

1. A newspaper listing of bond prices has an "Asked yield" column. This yield is based on the asked price and represents the:

a. coupon rate.b. yield to maturity.c. difference between the current yield and the yield to maturity.

d. difference between the bonds yield and the yield of a comparable Treasury issue.

e. current yield.

2

Filer Manufacturing has 8 million shares of common stock outstanding. The current share price is $50, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $69.4 million and a coupon rate of 6.7 percent and sells for 108.6 percent of par. The second issue has a face value of $59.4 million and a coupon rate of 7.2 percent and sells for 108.3 percent of par. The first issue matures in 9 years, the second in 26 years.

Suppose the companys stock has a beta of 1.3. The risk-free rate is 2.8 percent, and the market risk premium is 6.7 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent. What is the companys WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC=_________%

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