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A firm has a total book value of debt of 100 million, total book value of equity of 120 million. The market capitalization (market value
A firm has a total book value of debt of 100 million, total book value of equity of 120 million. The market capitalization (market value of equity) is 250 million. All of the companies debt comes from a recent bond issuance with total Face Value of 100 million. Those bonds have 5-year maturity, annual coupon payments with the coupon rate of 5%, and the yield-to-maturity is 4%.
Based on the above information what are the weights of debt and equity you use in your WACC calculation.
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