Random, Inc is considering the acquisition of a chain of cemeteries for $440 Million, Since the primary
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Question:
Random, Inc is considering the acquisition of a chain of cemeteries for $440 Million, Since the primary asset of this business is real estate, Random's management has determined that they will be able to borrow the majority of the money needed to buy the business, The current owners have no debt financing, but Random plans to borrow $340 Million and invest only $90 Million in equity in the acquisition. What weights should Random use in the computing the WACC for this acquisition?
- What is the appropriate weight of debt?
- What is the appropriate weight of common equity?
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