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The total book value of WTC's equity is $13 million, and book value per share is...

The total book value of WTC's equity is $13 million, and book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 9%. The firms bonds have a face value of $9 million and sell at a price of 110% of face value. The yield to maturity on the bonds is 6% and the firm's tax rate is 21%. What is the company's WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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Expert Solution

We see that WACC is given as=(9*110%*6%*(1-21%)+13*1.5*9%)/(9*110%+13*1.5)
=7.5655%

jeff jeffy answered 2 years ago
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