Compare Trout, Inc. with Salmon Enterprises, using the balance sheet of Trout and the market data...

 

Transcribed Image Text:

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 11.8% for both companies and the cost of equity is 16.42%, which company has the higher WACC? ... What is the book value adjusted WACC for Trout, Inc.? % (Round to two decimal places.) What is the market value adjusted WACC for Salmon Enterprises? % (Round to two decimal places.) Which company has the higher WACC? (Select the best response.) O A. Salmon Enterprises has a higher WACC at 15.24% than Trout, Inc. with a WACC of 13.34%. B. Trout, Inc. has a higher WACC at 15.24% than Salmon Enterprises with a WACC of 13.34%. Data table Click on the Icon in order to copy its content into a spreadsheet. Trout, Inc. Current assets: Long-term assets: Total assets: $2,666,667 $9,333,333 $12,000,000 Current liabilities: Long-term liabilities: Owners' equity: Salmon Enterprises Bonds outstanding: 3,000 selling at $1,091.31 Common stock outstanding: 260,000 selling at $36.87 $1,762,321 $6,816,575 $3,421,104 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 11.8% for both companies and the cost of equity is 16.42%, which company has the higher WACC? ... What is the book value adjusted WACC for Trout, Inc.? % (Round to two decimal places.) What is the market value adjusted WACC for Salmon Enterprises? % (Round to two decimal places.) Which company has the higher WACC? (Select the best response.) O A. Salmon Enterprises has a higher WACC at 15.24% than Trout, Inc. with a WACC of 13.34%. B. Trout, Inc. has a higher WACC at 15.24% than Salmon Enterprises with a WACC of 13.34%. Data table Click on the Icon in order to copy its content into a spreadsheet. Trout, Inc. Current assets: Long-term assets: Total assets: $2,666,667 $9,333,333 $12,000,000 Current liabilities: Long-term liabilities: Owners' equity: Salmon Enterprises Bonds outstanding: 3,000 selling at $1,091.31 Common stock outstanding: 260,000 selling at $36.87 $1,762,321 $6,816,575 $3,421,104

Answer rating: 100% (QA)

Book Value adjusted WACC for Trout Inc Trout Inc Debt will be 6816575 and Equity will be 3... View the full answer