Assume Bismuth Electronics Has a Book Value of $6 Billion

question 78

Multiple Choice

Assume Bismuth Electronics has a book value of $6 billion of equity and a face value of $19.7 billion of debt. The market values of equity and debt are $2.5 billion and $18.5 billion. A Wall Street financial analyst determines values of equity and debt as $3 billion and $20 billion. Which of the following values should be used for calculating the firm's WACC?

• A) $6 billion of equity and $19.7 billion of debt
• B) $2.5 billion of equity and $20 billion of debt
• C) $3 billion of equity and $19.9 billion of debt
• D) $2.5 billion of equity and $18.5 billion of debt

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