1a
Bonds	Book Value	Book Value Weight
1.	$3 B
2.	$1 B
3.	$2 B
4.	$2 B
Weighted Average Cost of Debt (based on book values)
Weighted Average Cost of Debt (based on market values)
Which is more appropriate?
1b
Weighted Average Cost of Capital (based on book values of debt and equity) show calculations
Weighted Average Cost of Capital (based on Market values of debt and equity) show calculations
Which is more relevant?
1c
Any potential problems with this pure play approach?
What improvements do you suggest to better reflect the WACC of SMI?

Book Value of Equity	$4,711,480
Stock Price	310.11
Market Value of Equity (market Capitalization)	52.119B
Number of Shares Outstanding	168.07M
Stock Beta	0.73
3-month T-bill rate	1.06
Cost of Equity	6.17%

Debt