Two companies, McDonalds and Burger King, each show a capitalization of $175,000,000 in their annual reports.

Problem #6: Debt/Equity Capital and WACC

Two companies, McDonalds and Burger King, each show a capitalization of $175,000,000 in their annual reports. The balance sheet for McDonalds indicates a total debt of $87 million, and that of Burger King indicates a net worth of $62 million. Determine the D-E mix for each company.

Expert Solution

For McDonals

Debt = $ 87,000,000

Cap = $175,000,000

Equity = cap - Debt = $88,000,000

For Burger King

Net worth (equity) = $62,000,000

Cap = $175,000,000

Debt = cap - equity = $113,000,000

Rahul Sunny answered 2 years ago

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