Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $6.

The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a yield to maturity of 8.60 percent, and sells for 94 percent of par. The second issue has a face value of $40 million, a yield to maturity of 7.53 percent, and sells for 107 percent of par. The first issue matures in 23 years, the second in 6 years.

Suppose the most recent annual dividend was $5.10 and the annual dividend growth rate is 9 percent. The tax rate is 34 percent. Calculate the companys WACC.

Start by calculating the firm's market value.

Firm's Market Value (debt & equity)

Now calculate the firm's cost of equity and after-tax cost of debt.

Cost of Equity After-tax Cost of Debt

Now calculate the WACC.

WACC

Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a yield to maturity of 8.60 percent, and sells for 94 percent of par. The second issue has a face value of $40 million, a yield to maturity of 7.53 percent, and sells for 107 percent of par. The first issue matures in 23 years, the second in 6 years. Suppose the most recent annual dividend was $5.10 and the annual dividend growth rate is 9 percent. The tax rate is 34 percent. Calculate the company's WACC. Start by calculating the firm's market value. (Enter your answer as a dollar amount, not millions of dollars, i.e. enter one million as 1,000,000) $ 661,600,000 Firm's Market Value (debt & equity) Now calculate the firm's cost of equity and after-tax cost of debt. (Enter your answers as percent rounded to two decimals. Assume the YTMs are quoted as an EAR, not an APR.) Cost of Equity 16.04% After-tax Cost of Debt 5.28 X % Now calculate the WACC. (Don't round your intermediate steps and enter your answer as a percent rounded to two decimals.) WACC 14.27 X %