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Category > Business & Finance Posted 18 May 2017 My Price 11.00

Here is Establishment Industries' market-value balance sheet (Figures in millions):

Here is Establishment Industries' market-value balance sheet (Figures in millions):

 

           
Net working capital $ 920 Debt $ 1,400
Long-term assets   2,980 Equity   2,500
 
 
Value of firm $ 3,900   $ 3,900
 
 

 

The debt is yielding 6.0%, and the cost of equity is 15.0%. The tax rate is 36%. Investors expect this level of debt to be permanent.

 

a. What is Establishment's WACC? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

WACC %

 

b.

How would the market-value balance sheet change if Establishment retired all its debt. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 1 decimal place.)

 

New Market-Value Balance Sheet
(figures in millions)
Net working capital $ Debt $
Long-term assets   Equity  
 
 
Value of firm $ Total $
 
 

Answers

Homework Helper
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Status NEW Posted 18 May 2017 04:05 AM My Price 11.00

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