About the shares of common stock outstanding

Assignment Help Financial Management

Reference no: EM13933694

Dinklage Corp. has 10 million shares of common stock outstanding. The current share price is $82, 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 $85 million, a coupon rate of 5 percent, and sells for 97 percent of par. The second issue has a face value of $55 million, a coupon rate of 6 percent, and sells for 105 percent of par. The first issue matures in 20 years, the second in 9 years.

Suppose the most recent dividend was $5.40 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 38 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: EM13933694

Questions Cloud

What is the immediate impact of ths transaction on the money : What is the immediate impact of this transaction on the money supply? Explain. Suppose that the reserve requirement is 10 percent and banks voluntarily keep an additional 10 percent in excess reserves. Calculate the following: The maximum amount by w..

Relevant case and statute law : Discuss the extent to which, and the ways in which, the courts and parliament have eroded the concept of 'freedom of contract' with reference to relevant case and statute law

What is the operating cash flow for the project in year : You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $420 per unit and sales volume to be 1,200 units in year 1; 1,325 units in year 2; and 1,000 units in ..

Develop your skills to contribute to the body of knowledge : There are two components to the individual assessment. The first component is to write either a briefing paper (for the board and senior management), a blog or a journal article. The second component is to anonymously review at least two individua..

About the shares of common stock outstanding : Dinklage Corp. has 10 million shares of common stock outstanding. The current share price is $82, and the book value per share is $5. The company also has two bond issues outstanding. Suppose the most recent dividend was $5.40 and the dividend growth..

What is the cross-elasticity of demand : What is the cross-elasticity of demand for courses at universities that did not increase their fees with respect to the price of courses at universities that did increase their fees?

Analyse package using principles of contract law : 1. Identify the key information about the holiday as set out in brochure. 2. Critically analyse the package using the principles of contract law found in case law and categorise the statements into representations, terms, conditions and warranties.

What is the investment proportion : Assume that you manage a risky portfolio which consists of Stock A and Stock B in the proportions listed below. Expected Return with an expected rate of return of these stocks are also listed in the table. The T-bill rate is 5%. What is the expected ..

Descriptive analysis of the two variables : Provide a descriptive analysis of the two variables (e.g., mean, standard deviation, minimum and maximum).

User Account

All Pages