Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Filer Manufacturing has 5,801,361 shares of common stock outstanding. The current share price is $70.26, and the book value per share is $9.76. Filer Manufacturing

image text in transcribed
Filer Manufacturing has 5,801,361 shares of common stock outstanding. The current share price is $70.26, and the book value per share is $9.76. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $43,022,303, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $60,381,465, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $1.85 and the dividend growth rate is 0.03 . 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 0.38 . What is Filer's WACC? Enter the answer with 4 decimals (e.g. 0.2345) Filer Manufacturing has 5,801,361 shares of common stock outstanding. The current share price is $70.26, and the book value per share is $9.76. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $43,022,303, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $60,381,465, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $1.85 and the dividend growth rate is 0.03 . 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 0.38 . What is Filer's WACC? Enter the answer with 4 decimals (e.g. 0.2345)

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

Step: 3

blur-text-image

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

The Handbook Of Sentiment Analysis In Finance

Authors: Gautam Mitra, Xiang Yu

1st Edition

1910571571, 978-1910571576

More Books

Students also viewed these Finance questions

Question

How is bonus shares treated in the Investment Account?

Answered: 1 week ago