Candyland Inc. has 400,000 shares outstanding that sell for $33 a share. It also has a current bond issuance outstanding with a market value of $5 million. The firm’s book value of debt is $7 million. The firm’s equity cost of capital is 5.0% and the YTM of its debt is 3.0%. What is Candyland’s Pre-tax WACC? A. 4.27% B. 4.45% C. 4.11% D. 4.31%

Candyland Inc. has 400,000 shares outstanding that sell for $33 a share. It also has a current bond issuance outstanding with a market value of $5 million. The firm’s book value of debt is $7 million. The firm’s equity cost of capital is 5.0% and the YTM of its debt is 3.0%. What is Candyland’s Pre-tax WACC? A. 4.27% B. 4.45% C. 4.11% D. 4.31%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 4P

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