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Filer Manufacturing has 9.1 million shares of common stock outstanding.

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Filer Manufacturing has 9.1 million shares of common stock outstanding. The current share price is $54, 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 $68 million, has a 7 percent coupon, and sells for 92 percent of par. The second issue has a face value of $62.79 million, has a 7 percent coupon, and sells for 95.6 percent of par. The first issue matures in 11 years, the second in 7 years.;Requirement 1;(a) What is Filer's capital structure weight of equity on a book value basis?;(b) What is Filer's capital structure weight of debt on a book value basis?;Requirement 2;(a) What is Filer's capital structure weight of equity on a book value basis?;(b) What is Filer's capital structure weight of debt on a book value basis?;======================================================================================;QUESTION 2;Jungle, Inc., has a target debt?equity ratio of 0.73. Its WACC is 11.5 percent, and the tax rate is 34 percent.;(a) If Jungle's cost of equity is 15 percent, what is the pretax cost of debt?;(b) If instead you know that the after-tax cost of debt is 6.8 percent, what is the cost of equity?;Additional Requirements;Level of Detail: Show all work

 

Paper#21976 | Written in 18-Jul-2015

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