Calculate wacc based on book


Bolster Foods' (BF) balance sheet shows the total of $25 million long-term debt with coupon rate of 8.50%. The yield to maturity on this debt is 8.00%, and the debt has total current market value of $27 million. The balance sheet also shows that the company has 10 million shares of stock, and the stock has book value per share of $5.00. The current stock price is $20.00 per share, and stockholders' needed rate of return, rs, is 12.25%. The company recently decided that its target capital structure should have 35% debt, with balance being common equity. The tax rate is 40%. Calculate WACCs based on book, market, and target capital structures.

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Finance Basics: Calculate wacc based on book
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