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PLEASE SHOW YOUR WORK Crosby Construction Company has one bond issue outstanding with a face value of $155 million, an 8% coupon (semi-annual payments), and

PLEASE SHOW YOUR WORK

Crosby Construction Company has one bond issue outstanding with a face value of $155 million, an 8% coupon (semi-annual payments), and selling for 104% of par. The issue matures in 6 years. Crosby Construction also has 11 million shares of common stock outstanding. The current share price is $68, and the book value per share is $6. Dividends paid by the company for the last number of years are given in the table below; the most recent dividend received by the common shareholders was the $3.85 in 2016.

Year

2016

2015

2014

2013

2012

Dividend

$3.85

$3.75

$3.50

$3.24

$3.05

The companys tax rate is 35%.

a) What are Crosbys capital structure weights on a market value basis?

b) What is the Companys Weighted Average Cost of Capital (WACC)?

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