Filer Manufacturing has 8598242 shares of common stock outstanding. The current share price is $22.72, and...

80.2K

Verified Solution

Question

Finance

Filer Manufacturing has 8598242 shares of common stockoutstanding. The current share price is $22.72, and the book valueper share is $7.24. Filer Manufacturing also has two bond issuesoutstanding. The first bond issue has a face value of $58911674,has a 0.05 coupon, matures in 10 years and sells for 83 percent ofpar. The second issue has a face value of $53842405, has a 0.06coupon, matures in 20 years, and sells for 92 percent of par. Themost recent dividend was $1.26 and the dividend growth rate is0.06. Assume that the overall cost of debt is the weighted averageof that implied by the two outstanding debt issues. Both bonds makesemiannual payments. The tax rate is 0.36. What is Filer's WACC?Enter the answer with 4 decimals (e.g. 0.2345)

Answer & Explanation Solved by verified expert

3.8 Ratings (695 Votes)

WACC weight of debt cost of debt weight of equity cost of equity value of first bond issue face value percent of par 58911674 83 4889668942 value of second bond issue face value percent of par 53842405 92 4953501260 total value of debt 4889668942 4953501260 9843170202 total value of equity current share price number of shares outstanding 2272 8598242 19535205824 total value of firm total value of debt total value of equity 9843170202 19535205824 29378376026 weight of debt total value of debt total value of firm See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Filer Manufacturing has 8598242 shares of common stockoutstanding. The current share price is $22.72, and the book valueper share is $7.24. Filer Manufacturing also has two bond issuesoutstanding. The first bond issue has a face value of $58911674,has a 0.05 coupon, matures in 10 years and sells for 83 percent ofpar. The second issue has a face value of $53842405, has a 0.06coupon, matures in 20 years, and sells for 92 percent of par. Themost recent dividend was $1.26 and the dividend growth rate is0.06. Assume that the overall cost of debt is the weighted averageof that implied by the two outstanding debt issues. Both bonds makesemiannual payments. The tax rate is 0.36. What is Filer's WACC?Enter the answer with 4 decimals (e.g. 0.2345)