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Dani Corp. has 5.5 million shares of common stock outstanding. The current share price is $83, 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 $80 million, a coupon rate of 5.5 percent, and sells for 109 percent of par. The second issue has a face value of $45 million, a coupon rate of 5.8 percent, and sells for 108 percent of par. The first issue matures in 21 years, the second in 6 years. Both bonds make semiannual coupon payments. The most recent dividend was $3.85 and the dividend growth rate is 5 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. The tax rate is 21 percent. What is the companys WACC? What are the companys capital structure weights on a market value basis?

Please post answer to all parts in yellow, the answers in red were my attempts that i forgot to delete. sorry!

Dani Corp. has 5.5 million shares of common stock outstanding. The current share price is $83, 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 $80 million, a coupon rate of 5.5 percent, and sells for 109 percent of par. The second issue has a face value of $45 million, a coupon rate of 5.8 percent, and sells for 108 percent of par. The first issue matures in 21 years, the second in 6 years. Both bonds make semiannual coupon payments. The most recent dividend was $3.85 and the dividend growth rate is 5 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. The tax rate is 21 percent. What is the company's WACC? What are the company's capital structure weights on a market value basis? Shares outstanding Market price per share Book value per share Current dividend Dividend growth rate Bond I Book value Coupon rate Bond price (% of par) Redemption (% of par) Settlement date Maturity date Payments per year Bond II 5,500,000 $83 $5 $3.85 5% $80,000,000 5.50% 109 100 1/1/2020 1/1/2041 2 Book value Coupon rate Bond price (% of par) Redemption (% of par) Settlement date Maturity date Payments per year Tax rate $45,000,000 5.80% 108 100 1/1/2020 1/1/2026 2 21% Output Area: Market value of equity Market value of Bond I Market value of Bond II Total market value of company Weight of equity Weight of Bond I Weight of Bond II Pretax cost of Bond I Aftertax cost of Bond I Pretax cost of Bond II Aftertax cost of Bond II Cost of equity WACC $456,500,000 $80,000,109 $45,000,000 $581,500,109 0.7850 0.1376 0.0774

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