Question
Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon maturity of 6.00%. This debt currently has a market
Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon maturity of 6.00%. This debt currently has a market value of $50 million. The balance sheet also shows shares of common stock, and the book value of the common equity (common stock plus retained earning stock price is $ 15 per share; stockholders ' required return, rs, is 14.00%; and the firm's tax rate is 20%. Th should be based on market value weights, but the president thinks book weights are more appropriate. between these two WACCS (WACC based on market value - WACC based on book value)?
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