PLEASE SHOW WORK, NO EXCEL

a. 1.08% b. 0.93% c. 0.70% d. 1.24% e. 1.47%

Sapp Trucking's balance sheet shows a total of noncallable $35 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $70 million. The current stock price is $23.00 per share; stockholders' required return, rs, is 14.00%; and the firm's tax rate is 25%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. VVhat is the difference between these two WACCs? O O O O O a. 1.08% b. 0.93% c. 0.70% d. 1.24% e. 1.47%