What is the company aftertax cost of debt

Assignment Help Financial Management

Reference no: EM132044994

Bonaime, Inc., has 6.1 million shares of common stock outstanding. The current share price is $61.10, and the book value per share is $4.10. The company also has two bond issues outstanding. The first bond issue has a face value of $70.1 million, a coupon rate of 7.1 percent, and sells for 97.5 percent of par. The second issue has a face value of $35.1 million, a coupon rate of 6.6 percent, and sells for 96.5 percent of par. The first issue matures in 21 years, the second in 13 years. The most recent dividend was $2.90 and the dividend growth rate is 7 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 cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity %

What is the company’s aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Aftertax cost of debt %

What is the company’s equity weight? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)

Equity weight

What is the company’s weight of debt? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)

Debt weight

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 %

Reference no: EM132044994

Questions Cloud

What is universal design and multi-modal system : What is Universal design and Multi-modal system? And how does the self driving cars relate or meet the Universal design and Multi-modal design requirement

Understand most common types of attacks and threats : Why there are many different roles within an organization concerned with information security?

Prepare the entry at december to record compensation expense : Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock appreciation rights plan

Criminal investigation organization : Would you suggest collecting evidence for the case be handled by internal corporate investigations or by an outside criminal investigation organization?

What is the company aftertax cost of debt : Bonaime, Inc., has 6.1 million shares of common stock outstanding. What is the company’s cost of equity? What is the company’s aftertax cost of debt?

Define how the mind and body work together : Contemporary psychologists are beginning to recognize the interconnectivity of human physiology and psychology in a way not previously understood.

Common connectors on pcs used for video monitors today : List and describe two of the most common connectors on PCs used for video monitors today?

Considered when determining the value of firm : According to Modigliani and Miller (MM)'s basic theory of capital structure, which of the following is considered when determining the value of a firm?

What are the benefits of using digital authentication : Please describe the purpose of digital signatures. What are the benefits of using digital authentication?

User Account

All Pages