Filer Manufacturing has 6,294,304 shares of common stock outstanding. The current share price is $44.58, and the book value per share is $7.96. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $68,793,629, has a 0.06 coupon, matures in 7 years and sells for 84 percent of par. The second issue has a face value of

Filer Manufacturing has 6,294,304 shares of common stock outstanding. The current share price is $44.58, and the book value per share is $7.96. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $68,793,629, has a 0.06 coupon, matures in 7 years and sells for 84 percent of par. The second issue has a face value of

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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Filer Manufacturing has 5,766,872 shares of common stock outstanding. The current share price is $36.05, and the book value per share is $7.08. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $64,298,817, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $48,100,600, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $2.78 and the dividend growth rate is 0.05. 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 0.35. What is Filer's aftertax cost of debt? Enter the answer with 4 decimals (e.g. 0.2345)
Filer Manufacturing has 4,974,719 shares of common stock outstanding. The current share price is $40.66, and the book value per share is $6.73. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $55,875,772, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $53,512,467, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $1.84 and the dividend growth rate is 0.03. 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 0.27. What is Filer's WACC? Enter the answer with 4 decimals (e.g. 0.2345)
Filer Manufacturing has 6,242,827 shares of common stock outstanding. The current share price is $74.81, and the book value per share is $7.42. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $46,473,482, has a 0.07 coupon, matures in 28 years and sells for 85 percent of par. The second issue has a face value of $49,382,232, has a 0.06 coupon, matures in 19 years, and sells for 82 percent of par. The most recent dividend was $0.9 and the dividend growth rate is 0.07. 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 0.34. What is Filer's cost of equity? Enter the answer with 4 decimals (e.g. 0.2345)
Finanace Filer Manufacturing has 8,104,146 shares of common stock outstanding. The current share price is $65.08, and the book value per share is $5.81. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $75,446,540, has a 0.06 coupon, matures in 28 years and sells for 97 percent of par. The second issue has a face value of $40,290,719, has a 0.06 coupon, matures in 24 years, and sells for 86 percent of par. The most recent dividend was $1 and the dividend growth rate is 0.03. 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 0.21. What is Filer's cost of equity? Enter the answer with 4 decimals (e.g. 0.2345)
Nevada Mining Co. has only long term debt of $600. This debt consist of long term bond which has following features: face value is $1000, time to maturity is 40 years, and annual coupon rate is 0.13. These bond is currently traded in the market at a price of $1,505. Regarding the equity, the current stock price of the shares are $59 and the firms has 13 shares outstanding. Nevada Mining Co. is planning to distribute $11 dividend per share and these dividends are expected to grow 0.06 each year. If the tax rate of Nevada Mining Co. is 0.40, calculate the WACC. Show your steps in your calculations. Please answer in detail use formulae step by step answer
Filer Manufacturing has 8.3 million shares of common stock outstanding. The current share price is $53, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $70 million and a coupon rate of 7 percent and sells for 108.3 percent of par. The second issue has a face value of $60 million and a coupon rate of 7.5 percent and sells for 108.9 percent of par. The first issue matures in 8 years, the second in 27 years. a.Compute and discuss Filer's capital structure weights on a book value basis. b. Compute and anlyse Filer's capital structure weights on a market value basis. c. Determine either the book or market value weights is more relevant.
Florida Manufacturing has 7.3 million shares of common stock outstanding. The current share price is $43, and the book value per share is $3. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $68.0 million and a coupon rate of 6.0 percent and sells for 109.3 percent of par. The second issue has a face value of $58.0 million and a coupon rate of 6.5 percent and sells for 106.9 percent of par. The first issue matures in 7 years, the second in 28 years. Suppose the company’s stock has a beta of 1.4. The risk-free rate is 2.1 percent, and the market risk premium is 6.0 percent. Assume that the overall cost of debt is the weighted average 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 and round your answer to 2 decimal places. (e.g., 32.16))
Hero Manufacturing has 8.5 million shares of common stock outstanding. The current share price is $77 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 $70 million, a coupon rate of 6.6 percent and sells for 108.5 percent of par. The second issue has a face value of $55.3 million, a coupon rate of 7.8 percent and sells for 112.3 percent of par. The first issue matures in 10 years, the second in 28 years. Suppose the company’s stock has a beta of 1.4. The risk-free rate is 2.8 percent and the market risk premium is 6.9 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 22 percent. What is the company’s WACC?
MoMahon Ltd currently has $300 million of market value debt outstanding. The 9 percent coupon bonds (semi-annual pay) have a maturity of 15 years and are currently priced at $1,550.04 per bond. The face value of the bond is $1,000. The company also has an issue of 1 million preference shares outstanding with a market price of $24.00. The preference shares offer an annual dividend of $2.40. McMahon Ltd also has 7 million ordinary shares outstanding with a price of $40.00 per share. The company is expected to pay a $4.4 ordinary dividend one year from today, and that dividend is expected to increase by 6 per cent per year forever. If the corporate tax rate is 30 per cent, then what is the company’s weighted average cost of capital (WACC)?
Pandora Manufacturing has 8.4 million shares of common stock outstanding. The current share price is $54, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $70.2 million and a coupon rate of 7.1 percent and sells for 108.2 percent of par. The second issue has a face value of $60.2 million and a coupon rate of 7.6 percent and sells for 109.1 percent of par. The first issue matures in 9 years, the second in 26 years. The company's stock has a beta of 1.3. The risk-free rate is 3.2 percent, and the market risk premium is 7.1 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 21 percent. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %
Pandora Manufacturing has 8.7 million shares of common stock outstanding. The current share price is $57, and the book value per share is $5. The company also has two bond Issues outstanding. The first bond issue has a face value of $70.8 million and a coupon rate of 7.4 percent and sells for 107.9 percent of par. The second issue has a face value of $60.8 million and a coupon rate of 7.9 percent and sells for 109.7 percent of par. The first issue matures in 9 years, the second in 26 years. The company's stock has a beta of 1,3. The risk-free rate is 3.5 percent, and the market risk premium is 7.4 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 24 percent. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
The Cullumber Products Co. currently has debt with a market value of $300 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 $1,429.26 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $20 per share. The preferred shares pay an annual dividend of $1.20. Cullumber 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 6 percent per year forever. If Cullumber 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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