You are contemplating about whether to use book value or market value weightsin WACC calculation Your firm's balance sheet shows a total of non-callable $45 million long-term debt with a coupon rate of 7% and a yield to maturity of 6% This debt currently has a market value of $50 million The company has 10 million shares of common stock and the stock has a book value per share of $6.50. The current stock price is $22.50 per share: stockholders' required retum 19. is 14%; and the firm's tax rate is 40% Calculate WACCs based on book and market value weights. Which WACC should you use to evaluate comparty's future projects? Explain $ $ Book value of debt: Coupon rate of debt: YTM of debt: Market value of debt: Number of shares: Book value per share: Market price per share: Stockholder's required return; Tax rate: Component cost of debt: Cost of common stock: 45 millions 7% 6% 50 millions 10 millions 6.50 22.50 14% 40% 4.20% $ $ Based on Book Value Market Value Weight of debt Weight of equity: WACC: Which WACC? Explain