Q1

a)

What equity proportion should be used when calculating WACC for a firm with $50 million in debt selling at a price of 95 for a par value of 100, $60 million in book value of equity, and $70 million in market value of equity?

		50.00%
		54.18%
		59.57%
		60.47%

b)The total book value of Booksellers Inc equity is 10 million. The stock has a market-to-book ratio of 2.2, and the cost of equity is 12%. The book value of the firms bonds is 8 million and they are currently selling at a price of 97.50 in the secondary market. The coupon on the bonds is 5%, the yield to maturity is 6%, and the firms tax rate is 25%. What is the companys WACC? Express your answer as a percentage, rounded to 2 decimal places.

c)The book value of the equity of a UK firm is 5 million. The firm's market to book ratio is 2.5. It has several 10 year bonds outstanding which are trading at 108.50 and have an annual coupon of 5%. The book value of its debt is 7 million. Its cost of equity is 10.25%. If the corporate tax rate is 30%, what is this firm's WACC? Express your answer as a percentage, rounded to 2 decimal places, eg. 5.55