Question
The total book value of WTCs equity is $10 million, and book value is $20 per share. The stock market has a market-to-book ratio of
The total book value of WTCs equity is $10 million, and book value is $20 per share. The stock market has a market-to-book ratio of 1.5 and cost of equity is 15%. The firms bonds have a face value of $5 million and sell at a price 110% of face value. The yield to maturity on the bonds is 9%, and the firms tax rate is 21%. Find the companys WACC.
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
4th Edition
0077262379, 978-0077262372
