Bolster Foods' (BF) balance sheet shows a total of $24 million long-term debt with a...
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Finance
Bolster Foods' (BF) balance sheet shows a total of $24 million long-term debt with a coupon rate of 8.50%. The yield to maturity on this debt is 8.00%, and the debt has a total current market value of $31 million. The balance sheet also shows that the company has 10 million shares of stock, and the stock has a book value per share of $2.00. The current stock price is $27.00 per share, and stockholders' required rate of return, rs, is 12.00%. The company recently decided that its target capital structure should have 25% debt, with the balance being common equity. The tax rate is 25%. Calculate WACCs based on book, market, and target capital structures, and then find the sum of these three WACCs. Do not round your intermediate calculations.
a. 26.10%
b. 30.95%
c. 32.41%
d. 24.30%
e. 30.61%
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