Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Dani Corporation has 3 . 6 million shares of common stock outstanding. The current share price is $ 8 5 . 5 0 , and

Dani Corporation has 3.6 million shares of common stock outstanding. The current share price is $85.50, and the book value per share is $9.25. The company also has two bond issues outstanding. The first bond issue has a face value of $73 million, a coupon rate of 5.3 percent, and sells for 95.7 percent of par. The second issue has a face value of $45 million, a coupon rate of 5.9 percent, and sells for 104.9 percent of par. The first issue matures in 23 years, the second in 11 years. The most recent dividend was $4.04 and the dividend growth rate is 4.3 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 23 percent.
1)What is the companys cost of equity?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.2)What is the companys aftertax cost of debt?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.3) What is the companys weight of equity?
Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g.,32.1616.4) What is the companys weight of debt?
Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g.,32.1616.5)What is the companys WACC?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Real Estate Finance And Investments

Authors: William Brueggeman, Jeffrey Fisher

17th Edition

1264072945, 978-1264072941

More Books

Students explore these related Finance questions