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:

Transgression

A geologic event where the sea advances over land areas, covering them with sediment layers due to rising sea levels.

Mudstone

A rock composed of consolidate mud (silt, clay, or especially a combination of the two).

Transgression

A geological event where the sea advances over land due to rising sea levels or subsiding land, leading to the deposition of marine sediments over terrestrial ones.

Marine Sedimentary Facies

Specific areas within sedimentary deposits in marine environments characterized by a distinct set of physical, chemical, and biological attributes.