What is the difference between the waccs using market value


ABC Trucking's balance sheet shows a total of non-callable $30 million long-term debt with a coupon rate of 5.90% and a yield to maturity of 7.10%. This debt currently has a market value of $33 million. The balance sheet also shows that the company has 20 million shares of common stock, and the book value of the common equity is $200.00 million. The current stock price is $12.60 per share; stockholders' required return, rs, is 12.50%; and the firm's tax rate is 40.00%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between the WACCs using market value and the book value.

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Financial Management: What is the difference between the waccs using market value
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