Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $10. The company also has two bond issues outstanding. The first bond issue has a face value of $120 million, a coupon rate of 4 percent, and sells for 92 percent of par. The second issue has a face value of $105 million, a coupon rate of 3 percent, and sells for 104 percent of par. The first issue matures in 22 years, the second in 7 years. Both bonds make semiannual coupon payments. The tax rate is 25 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

Some information is missing on this question:

I looked for similar questions and they include a recently paid dividend of $4.75 and a growth rate of 5.2%

8.97%

Explanation:

total value of equity = $79 x 7,000,000 = $553,000,000

cost of equity:

$79 = $4.997 / (rrr - 5.2%)

rrr - 5.2% = 6.3%

rrr = 11.5%

total value of debt:

$120 million x 0.92 = $110,400,000

YTM = {40 + [(1,000 - 920)/22]} / [(1,000 + 920)/2] = 43.64 / 960 = 4.55%

$105 million x 1.04 = $109,200,000

YTM = {30 + [(1,000 - 1,040)/7]} / [(1,000 + 1,040)/2] = 24.29 / 1,020 = 2.38%

total value of the firm = $553,000,000 + $110,400,000 + $109,200,000 = $772,600,000

equity weight = $553,000,000 / $772,600,000 = 0.7158

debt₁ weight = $110,400,000 / $772,600,000 = 0.1429

debt₂ weight = $109,200,000 / $772,600,000 = 0.1413

WACC = (0.7158 x 11.5%) + (0.1429 x 4.55% x 0.75) + (0.1413 x 2.38% x 0.75) = 8.23% + 0.49% + 0.25% = 8.97%

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.