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QUESTION 1 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....
QUESTION 1Filer 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 2Jungle, 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?
ANSWER 1 a) Equityb) Debt Requirement 1BV Notes9.1 * 568 + 62.79 Book ValueMV Notes45.509.1 * 54130.79 (68*0.92) + (62.79*0.956)176.29 Market Value491.40122.59 Book Value Weights...