Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Filer Manufacturing has 6,129,424 shares of common stock outstanding. The current share price is $36.61, and the book value per share is $3.88. Filer Manufacturing
Filer Manufacturing has 6,129,424 shares of common stock outstanding. The current share price is $36.61, and the book value per share is $3.88. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $50,736,859, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $70,938,242, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $0.68 and the dividend growth rate is 0.06 . 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 0.24 . What is Filer's aftertax cost of debt? Enter the answer with 4 decimals (e.g. 0.2345)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started