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In: Finance
Bonaime, Inc., has 7.9 million shares of common stock outstanding. The current share price is $62.90,...
Bonaime, Inc., has 7.9 million shares of common stock
outstanding. The current share price is $62.90, and the book value
per share is $5.90. The company also has two bond issues
outstanding. The first bond issue has a face value of $71.9
million, a coupon rate of 7.4 percent, and sells for 88.5 percent
of par. The second issue has a face value of $36.9 million, a
coupon rate of 8.4 percent, and sells for 87.5 percent of par. The
first issue matures in 18 years, the second in 10 years. The most
recent dividend was $3.80 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. Both
bonds make semiannual payments. The tax rate is 40 percent.
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.)
Solutions
jeff jeffy answered 9 months agoRelated Solutions
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