Here is a simplified balance sheet for Epicure Pizza (figures in $ millions): Epicure shares are currently

Question:

Here is a simplified balance sheet for Epicure Pizza (figures in $ millions):

Epicure shares are currently priced at $12 each.

a. You wish to calculate Epicure?s WACC. What is the relevant figure for the company?s debt ratio?

b. You now realize that since Epicure issued its debt, interest rates have fallen substantially. Do you need to revise your measure of the debt ratio upward or downward?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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