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The total book value of WTC’s equity is $12 million, and the book value per share is $20. The stock has a market-to-book ratio of 1.5, and the cost of equity is 15%. 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 5%, and the firm’s tax rate is 40%. What is the company’s WACC?

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1. The total book value of WTC’s equity is $80 million and book value per share outstanding is $20. The stock of WTC is currently selling for a price of $35 per share and the beta of WTC is 1.15. The bonds of WTC have a face value of $40 million and sell at a price of 110 percent of face value. The yield to maturity on the bonds is 6.5 percent and the firm’s tax rate is 35 percent. If the E(Rm) = 8% and Rf = 1%, calculate the WACC of WTC.

Note: I would prefer the problem be solved using excel. Please be sure to show the work and all formulas involved.

A company’s book value of equity is $200 million, and its book value cost of equity is 20%. It has 2 million shares outstanding with a price per share of $125. Its beta is 1.35. The risk free rate is 2.25% and the return on the market is 18.50%. The company also has two bonds. The book value of bond 1 is $65 million and its coupon rate is 9%. The book value of bond 2 is $35 million and its coupon rate is 12%. The current yield to maturity for bond 1 is 12% and the current yield to maturity for bond 2 is 10%. Bond 1’s price is $940 and bond 2’s price is $1,025. The company’s tax rate is 35%. 18. Calculate the company’s book value debt to equity ratio. 19. Calculate the company’s book value cost of debt. 20. Calculate the company’s book value WACC. 21. Calculate the company’s market value debt to equity ratio. 22. Calculate the company’s market value cost of debt. 23. Calculate the company’s market value WACC

1.The total book value of WTC’s equity is $40 million and book value per share outstanding is $10. The stock of WTC is currently selling for a price of $75 per share and the beta of WTC is 1.05. The bonds of WTC have a face value of $42 million and sell at a price of 110 percent of face value. The yield to maturity on the bonds is 4.5 percent and the firm’s tax rate is 35 percent. If the E(Rm) = 8% and Rf = 1%, calculate the WACC of WTC

2.Suppose the company in #1 is considering the following expansion projects. How would you calculate the required rate of return to use in the NPV analysis of the following: Explain. (a) The company is considering an expansion to double the production of its current product. The company will issue either equity or debt (but not both) to pay for the expansion. (b) The company is considering adding a new product in a different line of business that is unrelated to their current product.

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