Question
Compare Trout, Inc. with Salmon Enterprises, using the following balance sheet of Trout and the market data of Salmon for the weights in the weighted
Compare Trout, Inc. with Salmon Enterprises, using the following balance sheet of Trout and the market data of Salmon for the weights in the weighted average cost of capital:
| Trout, Inc. |
| |||
| Current assets: | $2,000,000 | Current liabilities: | $1,000,000 | |
| Long-term assets: | $7,000,000 | Long-term liabilities: | $5,000,000 | |
| Total assets: | $9,000,000 | Owners' equity: | $3,000,000 | |
| Salmon Enterprises | ||||
| Bonds outstanding: 3,000 selling at $980.00 | ||||
| Common stock outstanding: 260,000 selling at $23.40 . If the after-tax cost of debt is 8.08.0% for both companies and the cost of equity is 12.0012.00%, which company has the higher WACC? What is the book value adjusted WACC for Trout Inc.?
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Algorithmic Finance A Companion To Data Science
Authors: Christopher Hian-ann Ting
1st Edition
9811238308, 978-9811238307
