1. Filer Manufacturing has 8800000 shares of common stock outstanding. The current share price is $71.53, and the book value per share is $6.72. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $48000000, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $73000000, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par.
2. The most recent dividend was $0.99 and the dividend growth rate is 0.06. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 0.28.
What is Filer's WACC? Enter the answer with 4 decimals (e.g. 0.2345)
3. You buy a share of stock, write a 1-year call option with X = $60, and buy a 1-year put option with X = $60. Your net outlay to establish the entire portfolio is $58.5. The stock pays no dividends.
What is the risk-free interest rate? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$"sign in your response.)
Risk-free rate %