At Westonci.ca, we provide reliable answers to your questions from a community of experts. Start exploring today! Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently. Join our Q&A platform to connect with experts dedicated to providing accurate answers to your questions in various fields.
Sagot :
Answer:
Filer Manufacturing
Filer's after-tax cost of debt is:
= 4.1440%.
Explanation:
a) Data and Calculations:
Outstanding common stock shares = 8,136,353
Current share price = $26.75
Book value per share = $5.85
Tax rate = 0.26
Most recent dividend paid = $1.97 per share
Dividend growth rate = 0.04
Outstanding bond issues:
First Bond Second Bond Total
Face value of issue $48,480,532 $66,060,894 $114,541,426
Selling price 83% of par 92% of par
Sales price $40,238,842 $60,776,022 $101,014,864
Relative sizes 40% 60%
Coupon rate of first bond 0.05 0.06
Weighted average cost of bonds 0.02 0.036
Before-tax cost of bonds = 0.056
After-tax cost of bonds = 0.056 * (1 - 0.26) = 0.04144 = 4.1440%
Maturity period 10 years 20 years
We hope this was helpful. Please come back whenever you need more information or answers to your queries. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Thank you for using Westonci.ca. Come back for more in-depth answers to all your queries.