+1-415-670-9189
info@expertsmind.com
Implied by the two outstanding debt issues
Course:- Financial Management
Reference No.:- EM13943005




Assignment Help
Assignment Help >> Financial Management

Vedder, Inc., has 7 million shares of common stock outstanding. The current share price is $62.00, and the book value per share is $5.00. Vedder also has two bond issues outstanding. The first bond issue has a face value of $71 million, a coupon rate of 7 percent, and sells for 93 percent of par. The second issue has a face value of $36 million, a coupon rate of 7.5 percent, and sells for 92 percent of par. The first issue matures in 20 years, the second in 12 years. The most recent dividend was $3.35 and the dividend growth rate is 6 percent. 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 35 percent.

Required:

What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
An art dealer sells a painting to Priya, telling her that it is an original painting made by a famous painter, and takes Priya's check for $500 in payment. Before making the s
Suppose a stock had an initial price of $90 per share, paid a dividend of $2.40 per share during the year, and had an ending share price of $98. Compute the percentage total r
The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has a cost of $155,000. The project will produce 950 cases of mineral wa
Determine the actual return for the fund over the 12 months ending October 2013. (This requires you to obtain prices and cash distributions from a source such as Yahoo Finance
Suppose you are going to buy a car. The cost of car is $24,000. You have $10,000 for down payment. You can borrow the balance of $14,000 from dealership’s finance company at 3
Assume that you just won the state lottery. Your prize can be taken in the form of $40,000 at the end of each of the next 25 years or as a single amount of $500,000 paid immed
Ms. Ieda Silva plans to retire in 30 years and expects to live for 20 years after retirement. She is preparing a savings plan to meet the following objectives. First, after re
A 9-year bond with a face value of $1000 is redeemable at par and earns interest at 10.2% convertible semiannually. Find the price to yield an investor 7.5% convertible semian