Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $85, and the book value per share is $8. The most recent annual dividend, paid this morning, was $5.70 and the dividend growth rate is 4 percent.
The company also has two bond issues outstanding. The first bond issue has a face value of $65 million, a coupon rate of 8%, a yield to maturity of 8.50%, and sells for 95 percent of par. The second issue has a face value of $40 million, a coupon rate of 9%, a yield to maturity of 7.07%, and sells for 108 percent of par. The first issue matures in 23 years, the second in 5 years.
The tax rate is 38 percent. Calculate the companyâs WACC.
Start by calculating the capital structure weights.
Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 decimal places, e.g., 0.1617.
Debt to Assets %
Equity to Assets %
Next, calculate the cost of equity and cost of debt to get the WACC.
Do not round intermediate calculations (i.e. use more than four decimal places when using the capital structure weights above). Enter the following answers as a percent rounded to 2 decimal places, e.g., 32.16.
Cost of Equity %
After-tax Cost of Debt %
WACC %
What I need is in Bold
| Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $85, and the book value per share is $8. The most recent annual dividend, paid this morning, was $5.70 and the dividend growth rate is 4 percent. |
| The company also has two bond issues outstanding. The first bond issue has a face value of $65 million, a coupon rate of 8%, a yield to maturity of 8.50%, and sells for 95 percent of par. The second issue has a face value of $40 million, a coupon rate of 9%, a yield to maturity of 7.07%, and sells for 108 percent of par. The first issue matures in 23 years, the second in 5 years. |
| The tax rate is 38 percent. Calculate the companyâs WACC. |
Start by calculating the capital structure weights.
Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 decimal places, e.g., 0.1617.
| Debt to Assets | % |
| Equity to Assets | % |
Next, calculate the cost of equity and cost of debt to get the WACC.
Do not round intermediate calculations (i.e. use more than four decimal places when using the capital structure weights above). Enter the following answers as a percent rounded to 2 decimal places, e.g., 32.16.
| Cost of Equity | % |
| After-tax Cost of Debt | % |
| WACC | % |
What I need is in Bold
Related questions
| Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $81, 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 $80 million, a coupon of 10 percent, and sells for 96 percent of par. The second issue has a face value of $50 million, a coupon of 11 percent, and sells for 104 percent of par. The first issue matures in 25 years, the second in 8 years. |
| a. | What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) |
| Equity/Value | |
| Debt/Value |
| b. | What are the companyâs capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) |
| Equity/Value | |
| Debt/Value | |
