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Filer Manufacturing has 11 million shares of common stock outstanding The current share price is $68 and the book value per share is $6 Filer Manufacturing also has one bond issue outstanding with

Filer Manufacturing has 11 million shares of common stock outstanding. The current share price is $68, and the book value per share is $6. Filer Manufacturing also has one bond issue outstanding with a face value of $55 million, an 8 percent coupon (semiannual payments), and selling for 104 percent of par. The issue matures in 6 years. Dividends paid by the company for the last number of years are given in the table below; the most recent dividend received by the common shareholders was the $3.85 at time 0. The company’s tax rate is 35 percent. What is Filer’s Cost of Equity? (Note: Round growth rate to the nearest whole number)

Year

Dividend

0

3.85

-1

3.75

-2

3.50

-3

3.24

-4

3.05

 

Apr 07 2020 View more View Less

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