Filer manufacturing also has two bond issues outstanding

Assignment Help Financial Management

Reference no: EM131346216

Filer Manufacturing has 4 million shares of common stock outstanding. The current share price is $83, and the book value per share is $8. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $90 million, has a 6 percent coupon, and sells for 98 percent of par. The second issue has a face value of $60 million, has a 7 percent coupon, and sells for 106 percent of par. The first issue matures in 21 years, the second in 3 years.

The most recent dividend was $5.5 and the dividend growth rate is 5 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 your intermediate calculations.)

Reference no: EM131346216

Questions Cloud

Required return on the company new equity : Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt−equity ratio of .75. It’s considering building a new $60 million manufacturing facility. A new issue of common stock: The flotation..

Many instances where corporate financial decisions : Behavioral finance suggests that there are many instances where corporate financial decisions are peppered with both finance and psychology. What can one do as a corporate analyst to potentially avoid these instances?

Working capital management linked to value maximization : How is working capital management linked to value maximization? How can you apply the cash conversion cycle (CCC) in your household? What would you specifically try to do with receipts and payments in this case?

Based on new technology has two major potential markets : A product based on a new technology has two major potential markets. The dominant uncertainty associated with it has to do with the technology rather than markets. Accordingly, the product will succeed in both of fail in both, with equal probability...

Filer manufacturing also has two bond issues outstanding : Filer Manufacturing has 4 million shares of common stock outstanding. The current share price is $83, and the book value per share is $8. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $90 million, ..

What is pretax cost of debt and aftertax cost of debt : Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 100 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually. Wha..

Share in dividends was received over six month period : If an investor purchased 100 shares of Biggee stock for $30 per share, 6 months ago, and then sold the stock today for $33 per share, what was the investor's holding period return if a total of $1 per share in dividends was received over the 6 month ..

What is the maximum increase in sales : The most recent financial statements for Throwing Copper Co. are shown here: What is the maximum increase in sales that can be sustained assuming no new equity is issued?

There are three forms of business organization : There are three forms of business organization. Which of the following has unlimited liability?

User Account

All Pages