A company's balance sheet shows a total of $25 million long-term debt with a coupon rate of
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A company's balance sheet shows a total of $25 million long-term debt with a coupon rate of 8.50%. The yield to maturity on this debt is 8.00%, and the debt has a total current market value of $27 million. The company has 10 million shares of stock, and the stock has a book value per share of $5.00. The current stock price is $20.00 per share, and stockholders' required rate of return, rcs, is 12.25%. The tax rate is 20%.
(a) Calculate WACC based on the book value of the capital. (b) Calculate WACC based on the market value of the capital.
Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
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