Question

Bonaime, Inc., has 6.7 million shares of common stock
outstanding. The current share price is $61.70, and the book value
per share is $4.70. The company also has two bond issues
outstanding. The first bond issue has a face value of $70.7
million, a coupon rate of 7.2 percent, and sells for 94.5 percent
of par. The second issue has a face value of $35.7 million, a
coupon rate of 7.2 percent, and sells for 93.5 percent of par. The
first issue matures in 22 years, the second in 14 years. The most
recent dividend was $3.20 and the dividend growth rate is 8
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 30 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?

Aftertax cost of debt %

What is the company’s equity weight?

Equity weight

What is the company’s weight of debt?

Debt weight

What is the company’s WACC?

WACC %

Answer #1

Bonaime, Inc., has 6.7 million shares of common stock
outstanding. The current share price is $61.70, and the book value
per share is $4.70. The company also has two bond issues
outstanding. The first bond issue has a face value of $70.7
million, a coupon rate of 7.2 percent, and sells for 94.5 percent
of par. The second issue has a face value of $35.7 million, a
coupon rate of 7.2 percent, and sells for 93.5 percent of par. The...

Bonaime, Inc., has 6.9 million shares of common stock
outstanding. The current share price is $61.90, and the book value
per share is $4.90. The company also has two bond issues
outstanding. The first bond issue has a face value of $70.9
million, a coupon rate of 7.4 percent, and sells for 93.5 percent
of par. The second issue has a face value of $35.9 million, a
coupon rate of 7.4 percent, and sells for 92.5 percent of par. The...

Masterson, Inc., has 4.9 million shares of common stock
outstanding. The current share price is $92.00, and the book value
per share is $12.50. The company also has two bond issues
outstanding. The first bond issue has a face value of $86 million,
a coupon rate of 5.4 percent, and sells for 97 percent of par. The
second issue has a face value of $58 million, a coupon rate of 5.8
percent, and sells for 105.3 percent of par. The...

Bonaime,
Inc., has 6.2 million shares of common stock outstanding. The
current share price is $61.20, and the book value per share is
$4.20. The company also has two bond issues outstanding. The first
bond issue has a face value of $70.2 million, a coupon rate of 7.2
percent, and sells for 97 percent of par. The second issue has a
face value of $35.2 million, a coupon rate of 6.7 percent, and
sells for 96 percent of par. The...

Ten Pins Manufacturing has 9 million shares of common stock
outstanding. The current share price is $75, and the book value per
share is $6. The company also has two bond issues outstanding. The
first bond issue has a face value of $85 million and a coupon rate
of 10 percent and sells for 96 percent of par. The second issue has
a face value of $65 million and a coupon rate of 11 percent and
sells for 109 percent...

Ten Pins Manufacturing has 9 million shares of common stock
outstanding. The current share price is $75, and the book value per
share is $6. The company also has two bond issues outstanding. The
first bond issue has a face value of $85 million and a coupon rate
of 10 percent and sells for 96 percent of par. The second issue has
a face value of $65 million and a coupon rate of 11 percent and
sells for 109 percent...

Filer Manufacturing has 9 million shares of common stock
outstanding. The current share price is $88, and the book value per
share is $7. Filer Manufacturing also has two bond issues
outstanding. The first bond issue has a face value of $80 million
and a coupon rate of 5 percent and sells for 98 percent of par. The
second issue has a face value of $55 million and a coupon rate of 6
percent and sells for 106 percent of...

Filer Manufacturing has 7 million shares of common stock
outstanding. The current share price is $86, and the book value per
share is $5. Filer Manufacturing also has two bond issues
outstanding. The first bond issue has a face value of $70 million
and a coupon rate of 9 percent and sells for 96 percent of par. The
second issue has a face value of $45 million and a coupon rate of
10 percent and sells for 104 percent of...

Ten Pins Manufacturing has 5 million shares of common stock
outstanding. The current share price is $84, and the book value per
share is $7. The company also has two bond issues outstanding. The
first bond issue has a face value of $60 million and a coupon rate
of 7 percent and sells for 94 percent of par. The second issue has
a face value of $35 million and a coupon rate of 8 percent and
sells for 107 percent...

Hero Manufacturing has 9 million shares of common stock
outstanding. The current share price is $72 and the book value per
share is $3. The company also has two bond issues outstanding. The
first bond issue has a face value of $70 million, a coupon rate of
6.4 percent and sells for 109.5 percent of par. The second issue
has a face value of $57.8 million, a coupon rate of 8.3 percent and
sells for 113.3 percent of par. The...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 13 minutes ago

asked 44 minutes ago

asked 46 minutes ago

asked 50 minutes ago

asked 50 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago