S$14-13$ Calculating the WACC $[$LO$3]$

Dani Corporation has $5\mathrm{.}5$ million shares of common stock outstanding. The current share

price is $$83,$ and the book value per share is $$5.$ The company also has two bond issues

outstanding. The first bond issue has a face value of $$80$ million, a coupon rate of $5\mathrm{.}5$

percent, and sells for $109$ percent of par. The second issue has a face value of $$45$

million, a coupon rate of $5\mathrm{.}8$ percent, and sells for $108$ percent of par. The first issue

matures in $21$ years, the second in $6$ years.

Suppose the most recent dividend was $$3\mathrm{.}85$ and the dividend growth rate is $5$ percent.

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

$21$ 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$.,32\mathrm{.}16.)$

WACC