Implied by two outstanding debt issues

Assignment Help Financial Management

Reference no: EM131314167

Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $89, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $85 million, a coupon rate of 6 percent, and sells for 96 percent of par. The second issue has a face value of $60 million, a coupon rate of 7 percent, and sells for 109 percent of par. The first issue matures in 21 years, the second in 9 years. Suppose the most recent dividend was $6.10 and the dividend growth rate is 8 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 35 percent. What is the company’s WACC?

Reference no: EM131314167

Questions Cloud

What serious threats does the united states face explain : What vulnerabilities or risks currently exist? Explain. What serious threats does the United States face? Explain. How significant are the threats posed compared to the other 5 topics? Why?

Explore the marketing and communications strategy : Your team will conduct research on the Internet to explore the marketing and communications strategy templates as well as discuss the importance of different templates used in marketing.

Assuming no market imperfections or tax effects exist : Simmons Mineral Operations, Inc., (SMO) currently has 430,000 shares of stock outstanding that sell for $50 per share. Assuming no market imperfections or tax effects exist, what will the share price be after: a. SMO has a four-for-three stock split?

Explore options during negotiations : Describe the process parties can undertake to explore options during negotiations.

Implied by two outstanding debt issues : Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $89, and the book value per share is $8. The company also has two bond issues outstanding. Assume that the overall cost of debt is the weighted average of tha..

How could us apply selected concepts to improve security : How could the U.S. apply the selected concepts to improve their own homeland security systems? Explain and be specific. How could these concepts have been applied to recent terrorist attacks or natural disasters? Explain.

Create subclasses instead of fields within the main class : Post a response that describes the application you choose and the class within that application - Identify one or two key distinctions within that class that would prompt you to create subclasses instead of fields within the main class.

Number of times compounded effective rate : Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 8...

What is the required return on the company stock : Mitchell, Inc., is expected to maintain a constant 5.85 percent growth rate in its dividends, indefinitely. If the company has a dividend yield of 4.35 percent, what is the required return on the company’s stock?

User Account

All Pages