Question
Fletcher Manufacturing has 8.9 million shares of common stock outstanding. The current share price is $38 and the book value per share is $8. Fletcher
Fletcher Manufacturing has 8.9 million shares of common stock outstanding. The current share price is $38 and the book value per share is $8. Fletcher Manufacturing also has two bond issues outstanding. The first bond issue has a total face value of $67 million, a coupon rate of 5.8%, and sells for 102% of par. The second issue has a face value of $49 million, a coupon rate of 7.1%, and sells for 103.5% of par. The first issue matures in 11 years, the second in 17 years. Suppose the company's stock has a beta of 1.3. The risk-free rate is 4.7% and the market risk premium is 6.8%. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semi-annual payments. The tax rate is 38%.
What is the firm's market value weight of equity?Answer 73.96%
What is the firm's market value weight of debt? Answer 26.04%
What is the firm's cost of equity? Answer 13.54%
What is the firm's cost of debt? Answer 6.06%
What is the firm's WACC?Answer 10.99%
Please show all work so I can figure the cost of debt and WACC
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