Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $30 per share and pays a dividend of $3 a share. The common stock sells for $20 per share and has a beta of 0.7. There are 1 million common shares outstanding. The market risk premium is 9%, the risk-free rate is 5%, and the firm’s tax rate is 40%. BOOK-VALUE BALANCE SHEET(Figures in $ millions)Assets Liabilities and Net Worth Cash and short-term securities$3.0 Bonds, coupon = 7%, paid annually(maturity = 10 years, current yield to maturity = 9%)$10.0 Accounts receivable 5.0 Preferred stock (par value $20 per share) 3.0 Inventories 9.0 Common stock (par value $0.10) 0.1 Plant and equipment 20.0 Additional paid-in stockholders’ equity 16.9 Retained earnings 7.0 Total$37.0 Total$37.0
A. What is the market debt-to-value ratio?
B. What is the Universities WACC?