A student is trying to find the market value of a firm's assets and is stuck at the step where they need to calculate the WACC.

The student is perplexed about how to find the debt-to-assets ratio needed in the WACC formula, when the value of assets is output by the valuation model but that same asset number is needed as an input into the valuation model.

Which of the below possible options is the WORST or least reasonable remedy to fix this circularity problem?

Select one:

a. Use the firm's current asset book value from the balance sheet.

b. Sum the firm's current equity and debt market values assuming that the firm's stock and debt are listed.

c. Sum the firm's current equity market value and book debt value assuming that the firm's stock are listed.

d. Average similar firms' WACCs to avoid the circularity problem.

e. Average similar firms' current market asset values.