Shares of common stock outstanding

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Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $75, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $85 million, a coupon rate of 10 percent, and sells for 96 percent of par. The second issue has a face value of $65 million, a coupon rate of 11 percent, and sells for 109 percent of par. The first issue matures in 25 years, the second in 9 years.

Suppose the most recent dividend was $4.70 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 34 percent. What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Reference no: EM131152341

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