Binomial Tree Farms financing includes $5 million of bank loans Its common equity is shown in Binomials Annual Report at $6 67 million It has 500,000 shares of common stock outstanding, which trade on the Wichita Stock Exchange at $18 per share What debt ratio should Binomial use to calculate its W...

We should use the market value of the stock not th ...

Binomial Tree Farms financing includes $5 million of bank loans. Its common equity is shown in Binomials

Question:

Binomial Tree Farm’s financing includes $5 million of bank loans. Its common equity is shown in Binomial’s Annual Report at $6.67 million. It has 500,000 shares of outstanding, which trade on the Wichita Stock Exchange at $18 per share. What debt ratio should Binomial use to calculate its WACC or asset beta? Explain.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...