What Percentage of Value Should Be Allocated to Equity in WACC

question 85

Multiple Choice

What percentage of value should be allocated to equity in WACC computations for a firm with $50 million in debt selling at 85% of par,$50 million in book value of equity,and $65 million in market value of equity?

• A) 50.0%
• B) 54.1%
• C) 56.5%
• D) 60.5%

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Definitions:

Public Assistance

Government programs designed to provide financial aid to individuals or groups who cannot support themselves, aimed at reducing poverty and providing basic needs.

GDP

Gross Domestic Product; a measure of the economic activity of a country, calculated as the total value of all goods and services produced over a specific time period.

Health Care Spending

The total amount of money spent on health care services by individuals, businesses, and governments.

Industrial Country

A nation with a significant level of development and standard of living, characterized by a strong industrial base.