Both bonds make semiannual payments-what is the company wacc

Assignment Help Financial Management

Reference no: EM131613035

Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $75, 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 $85 million, a coupon rate of 10 percent, and sells for 96 percent of par. The second issue has a face value of $65 million, a coupon rate of 11 percent, and sells for 109 percent of par. The first issue matures in 25 years, the second in 9 years. Suppose the most recent dividend was $4.70 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 34 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.)

WACC %

Please explain in a simple form to understand better

Reference no: EM131613035

Questions Cloud

What is the internal rate of return of the project : What is the Internal Rate of return of the Project. If the firm’s cost of capital is 6.5%, what is the Net Present Value of the Project.

Cash outflow must be a negative number : The Hot Air Company is contemplating the replacement of its old printing machine with new model costing $ 8 0,000. Cash outflow must be a negative number.

Statements about project cash flows : Which of the following statements about project cash flows is most correct?

Expected to provide after-tax annual cash flows : which has a cost of $280,000 today and is expected to provide after-tax annual cash flows of $96,000 for seven years.

Both bonds make semiannual payments-what is the company wacc : Dinklage Corp. has 9 million shares of common stock outstanding. Both bonds make semiannual payments. What is the company’s WACC?

What was dollar return and percent return : FedEx Corp. stock ended the previous year at $111.79 per share. If you owned 370 shares of FedEx, what was your dollar return and percent return?

Compute return firm should earn given its level of risk : If risk-free rate is 7.40 percent and risk premium is 6.4 percent, what is required return? Compute the return the firm should earn given its level of risk.

Effective annual interest rate on lending arrangement : What is the effective annual interest rate on this lending arrangement?

Air france will pay in us dollars at time of delivey : Explain in terms of how much Air France will pay in US dollars at the time of delivery.

User Account

All Pages