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suppose cooperation A has a book face debt value of $13m trading at 82% of face...

suppose cooperation A has a book face debt value of $13m trading at 82% of face value. It also has book equity of 17 million and 1.07 million shares of common stock trading at $26 per share. what is the weight for common equity that cooperation A should use in calculating its WACC?

Solutions

Expert Solution

Total market value of:

Debt=(13*82%)=$10.66 million

Equity=(1.07*26)=$27.82 million

Total market value=(10.66+27.82)=$38.48 million

Hence weight of equity=27.82/38.48

=0.723(or 72.3% approx)

jeff jeffy answered 2 years ago
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