Problem 13-5 Willerton Industries Inc. has the following balances in its capital accounts as of 12/31/X3: Long-term debt $65000000 Preferred stock 15000000 Common stock 40000000 Paid in excess 15000000 Retained earnings 37500000 Company's long-term debt is comprised of 20-year $1000 face value bonds issued 7 years ago at an 8% coupon rate. The bonds are now selling to yield 6%. Willerton's preferred is from a single issue of $100 par value, 9% preferred stock that is now selling to yield 8%. Willerton has 4 million shares of common stock outstanding at a current market price of $31. Assume the firm's cost of retained earnings is 16% and its marginal tax rate is 31%. Assume that the coupon payments are semi-annual. Calculate its WACC using its book-value-based capital structure ignoring flotation costs. Round the answer to two decimal places. Do not round your intermediate calculations. Make the same calculation using the market value-based capital structure. Round the answer to two decimal places. Do not round your intermediate calculations. How significant is the difference? Round the answer to two decimal places. Do not round your intermediate calculations. Check My Work Previous Next >