Dani Corporation has 4 million shares of common stock outstanding. The current share price is $76, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $105 million, has a coupon rate of 5 percent, and sells for 95 percent of par. The second issue has a face value of $90 million, has a coupon rate of 4 percent, and sells fo 107 percent of par. The first issue matures in 25 years, the second in 8 years. Suppose the most recent dividend was $4.60 and the dividend growth rate is 5.1 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 22 percent. What is the company's WACC? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. WACC %

Dani Corporation has 4 million shares of common stock outstanding. The current share price is $76, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $105 million, has a coupon rate of 5 percent, and sells for 95 percent of par. The second issue has a face value of $90 million, has a coupon rate of 4 percent, and sells fo 107 percent of par. The first issue matures in 25 years, the second in 8 years. Suppose the most recent dividend was $4.60 and the dividend growth rate is 5.1 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 22 percent. What is the company's WACC? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. WACC %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The Sandhill Products Co. currently has debt with a market value of $250 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,418.61 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $14 per share. The preferred shares pay an annual dividend of $1.20. Sandhill also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 4 percent per year forever. If Sandhill is subject to a 40 percent marginal tax rate, then what is the firm’s weighted average cost of capital? Calculate the weights for debt, common equity, and preferred equity. (Round intermediate calculations and final answers to 4 decimal places, e.g. 1.2514.) Debt Preferred equity Common equity
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Format A & B Dinklage Corp. has 8 million shares of common stock outstanding. The current share price is $60, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $85 million, a xxx coupon, and sells for 97 percent of par. The second issue has a face value of $50 million, an 8 percent coupon, and sells for 108 percent of par. The first issue matures in 21 years, the second in 6 years. Suppose the most recent dividend was $3.90 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, What is the company's WACC?
Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5,000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding bond has a total face value of $450,000 and currently sells for 102% of face. The pre-tax yield-to-maturity on the bond is 8.49%.Required: a) Calculate the total market value of the firm.
Pandora Manufacturing has 9 million shares of common stock outstanding. The current share price is $81, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $80 million and a coupon rate of 10 percent and sells for 96 percent of par. The second issue has a face value of $50 million and a coupon rate of 11 percent and sells for 104 percent of par. The first issue matures in 25 years, the second in 8 years. a. What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) b. What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) c. Which are more relevant, the book or market value weights? a. Equity/Value Debt/Value b. Equity/Value Debt/Value More relevant C.
XRT Infrastructure Corp. has 80,000 bonds outstanding that are selling at 90% of the par value (Bonds are selling at discount). Bonds with similar characteristics are yielding 10.8%. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $50 per share. The common shareholder anticipates receiving a dividend that will growth at 0%, based on the fact they received $5 dividend last year. The capital market analysts predict that dividends will continue to grow at the same rate into the foreseeable future. The firm’s tax rate is 28 percent. What would be your estimate of the cost of common stock (cost of equity)? What would be the estimate cost of capital (WACC)?
The JIRAF Company has 1700 bonds outstanding that have a market price of $1200 each and a face value of $1000. floatation cost is 0.015 the bond pays coupon of 0.055 quarterly for 11 years. The company also has 6,00 shares of preferred stock at a market price of $40 and dividends 1.5 each par value 20 dollars. The common stock is priced at $29 a share it is undervalued by $1.5 and there are 70000 shares outstanding, par value is 5 dollars the stock paid this year $1.1 and will continue to grow at a rate of 0.035 TAXES ARE 0.25 what is the cost of debt after tax? what is the cost of PS what is the cost of common stock? what is the weight of the bond according to book value method what is the weight of the stock according to book value method what is the weight of preferred stock according to book value method what is the weight of preferred stock according to book value method
Dineage Corporation has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million, has a 7 percent coupon, and sells for 94 percent of par. The second issue has a face value of $35 million, has a 8 percent coupon, and sells for 107 percent of par. The first issue matures in 22 years, the second in 4 years. The most recent dividend was $5.6 and the dividend growth rate is 8 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. What is the company's WACC?
Filer Manufacturing has 5,321,196 shares of common stock outstanding. The current share price is $52.83, and the book value per share is $9.19. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $43,973,360, has a 0.05 coupon, matures in 12 years and sells for 93 percent of par. The second issue has a face value of $50,007,464, has a 0.07 coupon, matures in 20 years, and sells for 89 percent of par. What is Filer's weight of debt on a market value basis? Enter the answer with 4 decimals (e.g. 0.2345)
Filer Manufacturing has 4,308,744 shares of common stock outstanding. The current share price is $42.19, and the book value per share is $9.71. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $46,309,431, has a 0.08 coupon, matures in 8 years and sells for 82 percent of par. The second issue has a face value of $41,779,016, has a 0.06 coupon, matures in 20 years, and sells for 80 percent of par. What is Filer's weight of debt on a market value basis? Enter the answer with 4 decimals (e.g. 0.2345)
Dani Corporation has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $10. The company also has two bond Issues outstanding. The first bond issue has a face value of $120 million, a coupon rate of 4 percent, and sells for 92 percent of par. The second issue has a face value of $105 million, a coupon rate of 3 percent, and sells for 104 percent of par. The first issue matures In 22 years, the second in 7 years. Suppose the most recent dividend was $4.75 and the dividend growth rate is 5.2 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. The tax rate Iis 25 percent. What is the company's WACC? (Do not round Intermedlate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %

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