Book Co. has 1.1 million shares of common equity with a par (book) value of $1.30, retained earnings of $30.8 million,and its shares have a market value of $49.52 per share. It also has debt with a par value of $18.8 million that istrading at 102% of par.a. What is the market value of its equity?b. What is the market value of its debt?c. What weights should it use in computing its WACC?a. What is the market value of its equity?The market value of the equity is $ million. (Round to two decimal places.)

Question aMarket value of equity = Number of shares outstanding × Market price per shareMarket value…

Answered: Book Co. has 1.1 million shares of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 8P

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Question

Book Co. has 1.1 million shares of common equity with a par (book) value of $1.30, retained earnings of $30.8 million,
and its shares have a market value of $49.52 per share. It also has debt with a par value of $18.8 million that is
trading at 102% of par.
a. What is the market value of its equity?
b. What is the market value of its debt?
c. What weights should it use in computing its WACC?
a. What is the market value of its equity?
The market value of the equity is $ million. (Round to two decimal places.)

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2. Book Co. has 1.5 million shares of common equity with a par (book) value of $1.15, retained earnings of $29.9 million, and its shares have a market value of $50.88 per share. It also has debt with a par value of $18.2 million that is trading at 102% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC? **round to two decimal places**
Book Co. has 1.3 million shares of common equity with a par (book) value of $1.30, retained earnings of $31.6 million, and its shares have a market value of $50.11 per share. It also has debt with a par value of $20.8 million that is trading at 101% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC? What is the market value of its debt? The market value of the debt is $ __ million. ? (Round to two decimal places.)
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Bryant Co. has $3.9 million of debt, $1 million of preferred stock, and $2.1 million of common equity. What would be its weight on debt? A) 0.30 B) 0.14 C) 0.56 D) 0.13
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Nick Co. has $3.86 million of debt, $2.92 million of preferred stock, and $2.53 million of common equity. What would be its weight on common equity? 28.22% 25.09% 27.18% 34.50%
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MV Corporation has debt with market value of $95 million, common equity with a book value of $99 million, and preferred stock worth $19 million outstanding. Its common equity trades at $49 per share, and the firm has 5.9 million shares outstanding. What weights should MV Corporation use in its WACC?

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