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Filer Manufacturing has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. The
Filer Manufacturing has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. The most recent dividend was $4.5 and the dividend growth rate is 8 percent. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $75 million, has a 8 percent coupon, and sells for 98 percent of par. The second issue has a face value of $55 million, has a 9 percent coupon, and sells for 107 percent of par. The first issue matures in 23 years, the second in 7 years. 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 30 percent. What is the cost of equity? Round to the nearest XX.XX%. What is the aftertax cost of debt? Note that the market value of debt is the percentage of par at which the bond is currently trading. Round to the nearest XX.XX%. Calculate the total market value of the firm. Note that this is the market value of equity plus the market value of debt (both bond issues). Round to the nearest dollar. What is the weighted average cost of capital (WACC)? It should include the aftertax cost of debt. Round to the nearest XX.XX%
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