Calculating WACC. Find the WACC of William Tell Computers. The total b

QUESTION

Calculating WACC. Find the WACC of William Tell Computers. The total book value of the firms equity is $10 million; book value per share is $20. The stock sells for a price of $30 per share, and the cost of equity is 15 percent. The firms bonds have a face value of $5 million and sell at a price of 110 percent of face value the yield to maturity on the bonds is 9 percent, and the firms tax rate is 40 percent.
344624 Equity $10,000,000 book value pr share $20 SP $ 30.00 k 15% Bond $5,000,000 Sp 110% of face value YTM 9% Tax Rate 40% Bookvalue Rate After Tax Market value Weights WACC Equity $10,000,000 15% 15% 15000000 0.73 10.98% Bond $5,000,000 9% 5% 5500000 0.27 1.45% 20500000 1 12.42% * No. of Equity Shares=Total Book value/Bookvalue per share * No. of¦

ty Shares=$10000000/$20 * No. of Equity Shares 500000 Market value of Equity=500000*$30 15000000 Market value of Bond=5000000*110% 5500000 *WACC= Weight of Market value of equity* cost of equity Weight of Market value of bond*YTM of bond

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