What Equity Proportion Should Be Used When Calculating WACC for a Firm

question 33

Multiple Choice

What equity proportion should be used when calculating WACC 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) 50.00%
• B) 54.18%
• C) 56.55%
• D) 60.47%

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Definitions:

Vertical Loading

Increasing the responsibility and complexity of an employee's job by adding tasks that are typically performed by higher-level personnel.

Responsibilities

Duties or tasks that an individual or group is expected to carry out or fulfill.

Management

The process of dealing with or controlling things or people, often within an organizational setting.

Vertical Loading

A management concept where employees are given more responsibility and autonomy in their roles, enhancing their involvement in decision-making processes.