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11.Miller Manufacturing has a target debt–equity ratio of .55. Its cost of
equity is 14 percent, and its cost of debt is 9 percent. If the tax rate is 40
percent, what is the company’s WACC? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal
places,
12.Filer Manufacturing has 4 million shares of common stock outstanding.
The current share price is $76, and the book value per share is $5. The
company also has two bond issues outstanding. The first bond issue has a
face value $90 million, a coupon of 5 percent, and sells for 94 percent of
par. The second issue has a face value of $70 million, a coupon of 6
percent, and sells for 104 percent of par. The first issue matures in 20
years, the second in 3 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.)
b.
What are the company's 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.)
c.
Which are more relevant?
13. Titan Mining Corporation has 8.9 million shares of common stock
outstanding and 330,000 5 percentsemiannual bonds outstanding, par
value $1,000 each. The common stock currently sells for $37 per share and
has a beta of 1.45, and the bonds have 15 years to maturity and sell for
118 percent of par. The market risk premium is 7.7 percent, T-bills are
yielding 4 percent, and the company’s tax rate is 40 percent.
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