Question
Dinklage Corp has 9 million shares of common stock outstanding The current share price is $81 and the book value per share n $7 The
Dinklage Corp has 9 million shares of common stock outstanding The current share
price is $81 and the book value per share n $7 The company also has two bond issues
outstanding The first bond issue has a face value of $130 million, a coupon rate of 5
percent and sells for 92 percent of pat the second issue has a face value of $115
million a coupon rate of 5 percent, and sells for 103 percent of par The first issue
matures in 24 years, the second in 10 years
Suppose the most recent dividend was $4.85 and the dividend growth rate is 52
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
22 percent What is the company's WACC?
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