Dani Corporation ha 7 million hare of common tock outtanding. The current hare price i $73, and the book value per hare i $8. The company alo ha two bond iue outtanding. The firt bond iue ha a face value of $90 million, ha a coupon rate of 6 percent, and ell for 98 percent of par. The econd iue ha a face value of $75 million, ha a coupon rate of 5 percent, and ell for 110 percent of par. The firt iue mature in 22 year, the econd in 7 year. Suppoe the mot recent dividend wa $4. 45 and the dividend growth rate i 4. 8 percent. Aume that the overall cot of debt i the weighted average of that implied by the two outtanding debt iue. Both bond make emiannual payment. The tax rate i 24 percent. What i the company’ WACC?

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24-11-2022
Business

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Dani Corporation ha 7 million hare of common tock outtanding. The current hare price i $73, and the book value per hare i $8. The company alo ha two bond iue outtanding. The firt bond iue ha a face value of $90 million, ha a coupon rate of 6 percent, and ell for 98 percent of par. The econd iue ha a face value of $75 million, ha a coupon rate of 5 percent, and ell for 110 percent of par. The firt iue mature in 22 year, the econd in 7 year. Suppoe the mot recent dividend wa $4. 45 and the dividend growth rate i 4. 8 percent. Aume that the overall cot of debt i the weighted average of that implied by the two outtanding debt iue. Both bond make emiannual payment. The tax rate i 24 percent. What i the company’ WACC?

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kjuli1766 kjuli1766 · Answer 1 · 2022-12-08T05:14:44+01:00

If the tax rate i 24 percent, the company’ WACC is 0.2504.

Equity is the amount of money that a company's proprietor has put into it or owns. On a enterprise's balance sheet, the distinction between its liabilities and assets suggests how a great deal fairness the corporation has. the proportion charge or a price set via valuation professionals or investors is used to discern out the equity fee.

Book value weight

Particulars amount [millions ] (amount/total)

common stock $56.00 0.2534

first issue $90.00 0.4072

second issue $75.00 0.3394

Total Book value $221.00

Weight of equity on book value basis = 0.2534

Weight of debt on book value basis = 0.7466

Market value weight

Particulars amount [millions ] (amount/total)

common stock $511.00 0.7496

first issue $88.20 0.1294

second issue $82.50 0.1210

Total market value $681.70

Weight of equity on market value basis = 0.7496

Weight of debt on market value basis = 0.2504

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