Filer Manufacturing has 6,304,698 shares of common stock outstanding. The current share price is $64.63, and the book value per share is $7.44. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $52,563,528, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $79,570,384, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $2.68 and the dividend growth rate is 0.04. 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 aftertax cost of debt? Enter the answer with 4 decimals (e.g. 0.2345)

Filer Manufacturing has 6,304,698 shares of common stock outstanding. The current share price is $64.63, and the book value per share is $7.44. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $52,563,528, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $79,570,384, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $2.68 and the dividend growth rate is 0.04. 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 aftertax cost of debt? Enter the answer with 4 decimals (e.g. 0.2345)

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 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)
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 $42,689,410, has a 0.06 coupon, matures in 12 years, and sells for 83 percent of par. What is Filer's weight of equity on a market value basis? Enter the answer with 4 decimals (e.g. 0.2345) 0.7056 0.7506 margin of error +/- 1%
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)
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?
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.
Al Ain Manufacturing has 7.5 million shares of common stock outstanding. The current share price is $49, and the book value per share is $4. Al Ain Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $60 million and a 7 percent coupon and sells for 93 percent of par. The second issue has a face value of $50 million and a 6.5 percent coupon and sells for 96.5 percent of par. The first issue matures in 10 years, the second in 6 years. Required: What are Al Ain’s capital structure weights on a book value basis? What are Al Ain’s capital structure weights on a market value basis? Which are more relevant, the book or market value weights? Why?
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.)
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 %
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))
Dani Corp. has 5.5 million shares of common stock outstanding. The current share price is $83, 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 $80 million, has a coupon rate of 5.5 percent, and sells for 109 percent of par. The second issue has a face value of $45 million, has a coupon rate of 5.8 percent, and sells for 108 percent of par. The first issue matures in 21 years, the second in six years. The most recent dividend was $3.85 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 21 percent. What is the company’s WACC?
Dani Corporation has 7.3 million shares of common stock outstanding. The current share price is $43, and the book value per share is $3. The company also has two bond issues outstanding. The first bond issue has a face value of $68 million, a coupon rate of 6 percent, and sells for 109.3 percent of par. The second issue has a face value of $58 million, 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. 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 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 25 percent. What is the company’s WACC?

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