Question
An analyst following Dinozzo Security Corporation has just relayed the following information on the company: STOCK DEBT # of shares 5.00 million Face Value $198.00
An analyst following Dinozzo Security Corporation has just relayed the following information on the company:
| STOCK | DEBT | ||
|---|---|---|---|
| # of shares | 5.00 million | Face Value | $198.00 million |
| Price per share | $58.00 | Current trading value | 98.00% of face value |
| Shareholder equity | $103.00 million | Average maturity | 10.00 years |
Dinozzo bonds pay an annual coupon rate of 9.00%. The current risk free rate is 3.00%, while the market portfolio risk premium is 5.50%. The beta for Dinozzo Security is 1.32. The tax rate facing the firm is 37.00%. The firm is considering a project with an IRR of 10.00%.
What is the current yield to maturity on Dinozzo debt?
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