Problem 13-7 WACC (LO1) 20 points Examine the following book-value balance sheet for University Products...
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Problem 13-7 WACC (LO1) 20 points 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 $16 per share and has a beta of 0.8. There are 4 million common shares outstanding. The market risk premium is 10%, the risk-free rate is 6%, and the firm's tax rate is 40%. Skipped BOOK-VALUE BALANCE SHEET (Figures in s millions) Liabilities and Net Worth Bonds, coupon-; 5%, paid annually (maturity- 10 years, current yield to maturity- 6%) $12.0 Preferred stock (par value $15 per share) Common stock (par value $0.10) Additional paid-in stockholders' equity Retained earnings Assets eBook Cash and short-term securities $ 2.0 Accounts receivable Inventories Plant and equipment Print 4.0 8.0 20.0 3.0 0.4 7.6 11.0 $34.0 References Total $34.0 Total a. What is the market debt-to-value ratio of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Market debt-to-value ratio
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