Question
Fletcher Manufacturing has 9.2 million shares of common stock outstanding. The current share price is $37 and the book value per share is $6. Fletcher
Fletcher Manufacturing has 9.2 million shares of common stock outstanding. The current share price is $37 and the book value per share is $6. Fletcher Manufacturing also has two bond issues outstanding. The first bond issue has a total face value of $70 million, a coupon rate of 6.5%, and sells for 101% of par. The second issue has a face value of $40 million, a coupon rate of 6%, and sells for 103% of par. The first issue matures in 12 years, the second in 7 years. Suppose the company's stock has a beta of 0.7. The risk-free rate is 4.2% and the market risk premium is 6.5%. 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 30%
What is the firm's market value weight of equity? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).
What is the firm's market value weight of debt? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).
What is the firms cost of equity? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).
What is the firms cost of debt? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations).
What is the firms WACC? (Report answer in percentage terms and round to 2 decimal places. Do not round intermediate calculations. When using previous answers, use the rounded answer as it was given in the answer box).
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