WACC Estimation The table below gives the balance sheet for Travellers Inn Inc.

Question

WACC Estimation

The table below gives the balance sheet for Travellers Inn Inc. (TII), a company that was formed by merging a number of regional motel chains.

The following facts also apply to TII:

Assume that you were recently hired by TII as a financial analyst and that your boss, the treasurer, has asked you to estimate the company's WACC under the assumption that no new equity will be issued. Your cost of capital should be appropriate for use in evaluating projects that are in the same risk class as the assets TII now operates. Do not round intermediate steps. Round your answer to two decimal places.

%

Travellers Inn: December 31, 2012 (Millions of Dollars) Cash $10 Accounts payable $10 Accounts receivable 20 Accruals 10 Inventories 20 Short-term debt 5 Current assets $50 Current liabilities $25 Net fixed assets 50 Long-term debt 30 Preferred stock 5 Common equity Common stock $10 Retained earnings 30 Total common equity $40 Total assets $100 Total liabilities and equity $100

Explanation / Answer

Answer question

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.