Question
Here is a simplified balance sheet for Epicure Pizza (figures in $ millions): AssetsLiabilities and Shareholders' EquityCurrent assets$90Current liabilities$85Fixed assets26Long term debt11Equity20 Total$116Total$116 Note: There
Here is a simplified balance sheet for Epicure Pizza (figures in $ millions):
AssetsLiabilities and Shareholders' EquityCurrent assets$90Current liabilities$85Fixed assets26Long term debt11Equity20
Total$116Total$116
Note:There are 10 million shares outstanding.
Epicure shares are currently priced at $11 each.
a.What value should be used for debt when calculating the firm's WACC?(Enter your answer in millions.)
b.Since Epicure issued its debt, interest rates have fallen substantially. Do you need to revise your measure of the debt ratio upward or downward?
- Upward
- Downward
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Fundamentals of Investment Management
Authors: Geoffrey Hirt, Stanley Block
10th edition
0078034620, 978-0078034626
