Question
The total book value of WTC's equity is $12 million, and book value per share is $24. The stock has a market-to-book ratio of 1.5,
The total book value of WTC's equity is $12 million, and book value per share is $24. The stock has a market-to-book ratio of 1.5, and the cost of equity is 14%. The firm's bonds have a face value of $8 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 9%, and the firm's tax rate is 40%. What is the company's WACC?
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Public Finance and Public Policy
Authors: Jonathan Gruber
4th edition
1429278455, 978-1429278454
