Here is Establishment Industries' market-value balance sheet (figures in $ millions): The debt is yielding 7%, and

Question:

Here is Establishment Industries' market-value balance sheet (figures in $ millions):

The debt is yielding 7%, and the cost of equity is 14%. The tax rate is 35%. Investors expect this level of debt to be permanent.
a. What is Establishment's WACC?
b. How would the market-value balance sheet change if Establishment retired all its debt?

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... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...