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: If the after-tax cost of debt is 9.1% for both companies and the cost of equity is 13.77% which company has the higher WACC?

Current assets 2,000,000

Long-term assets 7,000,000

Total assets 9,000,000

Current liabilities 1,130,385

Long-term liabilities 5,171,474

Owners' equity 2,698,141

Salmon Enterprises

Bonds outstanding:

3,000 selling at $1,092.26

Common stock outstanding:

260,000 selling at $25.79

A. What is the book value adjusted WACC for Trout, Inc.? (Round to two decimal places.)

B. What is the market value adjusted WACC for Salmon Enterprises? (Round to two decimal places.)

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

a. Trout, Inc. has a higher WACC at 11.42% than Salmon Enterprises with a WACC of 9.43%.

b. Salmon Enterprises has a higher WACC at 11.42% than Trout, Inc. with a WACC of 9.43%