Question
cost of debt = 47.05% cost of capital = 10.48% market value of equity = 5% (?) market value of debt = 4.1% (?) v
cost of debt = 47.05% cost of capital = 10.48% market value of equity = 5% (?) market value of debt = 4.1% (?) v = E + D = total market value = $ 91,100,000 (?) E / V =% equity financing =? D / V =% debt financing =? tc = corporation tax rate = 35% (tax rate)
| Sources of capital | capital | |
| Debt (corporate bonds) | $ 4,100,000 / $ 100,000,000 | 0.041 (4.1%) |
| Preferred shares | $ 2,200,000 / $ 100,000,000 | 0.022 (2.2%) |
| Common shares | $ 2,800,000 / $ 100,000,000 | 0.028 (2.8%) |
| $ 9,100,000 | 91% |
Calculate the WACC
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
9781266566899
