Assume that the overall cost of debt is the weighted

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Filer manufacturing has 7.5 millions shares of common stock outstanding. The current share price is $49, and the book value per share is $4. Filer also has 2 bond issues outstanding the first bod issue has a face value of $60 millions and a 7% counpon and sells for 93% of par. The second issue has a face value of $50 million and a 6.5% coupon and sells for 96.5 percent of par. The first issue matures in 10 years, the second in 6 years. Suppose the company's stock has a beta of 1.2. The risk free rate is 5.2%, and the market risk premium is 7%. Assume that the overall cost of debt is the weighted average implied by the 2 outstanding debt issues. Both bonds make semiannual payments. The tax rate is 35%. What is the company's WACC?

Reference no: EM13478885

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