Book value versus market value

components.

Compare Trout, Inc. with Salmon Enterprises, using the balance sheet of Trout and the market data of Salmon for the weights in the weighted average cost of capital:

LOADING...

. If the after-tax cost of debt is

11.3%

for both companies and the cost of equity is

17.58%,

Book value versus market value

components.

Compare Trout, Inc. with Salmon Enterprises, using the balance sheet of Trout and the market data of Salmon for the weights in the weighted average cost of capital:

LOADING...

. If the after-tax cost of debt is

11.3%

for both companies and the cost of equity is

17.58%,

which company has the higher WACC?BE SURE TO USE ALL OF THE DIGITS (NOT ROUNDED VALUES) WHEN COMPUTING THE CAPITAL STRUCTURE WEIGHTS!

Question content area bottom

Part 1

What is the book value adjusted WACC for Trout, Inc.?

enter your response here%

(Round to two decimal places.)

What is the market value adjusted WACC for Salmon Enterprises?

enter your response here%

(Round to two decimal places.)

Which company has the higher WACC?(Select the best response.)

A.Trout, Inc. has a higher WACC at

15.99%

than Salmon Enterprises with a WACC of

13.19%.

B.Salmon Enterprises has a higher WACC at

15.99%

than Trout, Inc. with a WACC of

13.19%.

which company has the higher WACC?BE SURE TO USE ALL OF THE DIGITS (NOT ROUNDED VALUES) WHEN COMPUTING THE CAPITAL STRUCTURE WEIGHTS!

Question content area bottom

Part 1

What is the book value adjusted WACC for Trout, Inc.?

enter your response here%

(Round to two decimal places.)

What is the market value adjusted WACC for Salmon Enterprises?

enter your response here%

(Round to two decimal places.)

Which company has the higher WACC?(Select the best response.)

A.Trout, Inc. has a higher WACC at

15.99%

than Salmon Enterprises with a WACC of

13.19%.

B.Salmon Enterprises has a higher WACC at

15.99%

than Trout, Inc. with a WACC of

13.19%.