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Sapp Trucking's balance sheet shows a total of noncallable $45 million long-term debt with a coupon...

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Finance

Sapp Trucking's balance sheet shows a total of noncallable $45million long-term debt with a coupon rate of 7.00% and a yield tomaturity of 6.00%. This debt currently has a market value of $50million. The balance sheet also shows that the company has 10million shares of common stock, and the book value of the commonequity (common stock plus retained earnings) is $65 million. Thecurrent stock price is $20 per share; stockholders' requiredreturn, rs, is 12.3%; and the firm's tax rate is 40%. What is thecompany's WACC based on market value weighting?

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Sapp Trucking's balance sheet shows a total of noncallable $45million long-term debt with a coupon rate of 7.00% and a yield tomaturity of 6.00%. This debt currently has a market value of $50million. The balance sheet also shows that the company has 10million shares of common stock, and the book value of the commonequity (common stock plus retained earnings) is $65 million. Thecurrent stock price is $20 per share; stockholders' requiredreturn, rs, is 12.3%; and the firm's tax rate is 40%. What is thecompany's WACC based on market value weighting?

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