Question
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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