Question
Filer Manufacturing has 11 million shares of equity outstanding. The current share price is 68, and the book value per share is 6. Filer Manufacturing
Filer Manufacturing has 11 million shares of equity outstanding. The current share price is 68, and the book value per share is 6. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of 70 million, has a 7% coupon, and sells for 93% of par. The second issue has a face value of 55 million, has an 8% coupon, and sells for 104% of par. The first issue matures in 21 years, the second in 6 years. Suppose the most recent dividend was 4.10 and the dividend growth rate is 6%. Assume that the overall cost of debt is the weighted average cost of two outstanding debt issues. Both bonds make semi-annual payments. The tax rate is 28%. What is the companys WACC? Assume the face value of the debt is 1,000.
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