5 pts Question9 Sapp Trucking\'s balance sheet shows a total of non-callable $45

Question

5 pts Question9 Sapp Trucking's balance sheet shows a total of non-callable $45 million long- term debt with a coupon rate of 7% and a yield to maturity of 6%. This debt currently has a market value of $50 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current market value of equity (stock price) is $20 per share. Additionally, stockholders' required return is 12.1%, and the firm's tax rate is 40%. What is the company's WACC based on market value weighting? Your answer should be between 9.72 and 12.50, rounded to 2 decimal places with no special characters. D Question 10 5 pts FS F& F7 F8

Explanation / Answer

WACC = 10.40%

Amount weight cost weight*cost equity                           200.00 0.8000 12.1000% 0.0968 debt                              50.00 0.2000 3.6000% 0.0072

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