ANB ltd has common equity of $35.5mn and $31.9mn of long-term debt and $10.3mn of preferred equity on its books. Required return on these funds are 12%, 8%, and 10%, respectively. Market values of the common equity and long-term debt are $46.6mn and $35mn, respectively. Market value of preferred equity is the same as its book value. Estimate WACC for the company given that its effective tax rate is 30%.
ANB ltd has common equity of $35.5mn and $31.9mn of long-term debt and $10.3mn of preferred equity on its books. Required return on these funds are 12%, 8%, and 10%, respectively. Market values of the common equity and long-term debt are $46.6mn and $35mn, respectively. Market value of preferred equity is the same as its book value. Estimate WACC for the company given that its effective tax rate is 30%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ANB ltd has common equity of $35.5mn and $31.9mn of long-term debt and $10.3mn of preferred
equity on its books. Required return on these funds are 12%, 8%, and 10%, respectively. Market values
of the common equity and long-term debt are $46.6mn and $35mn, respectively. Market value of
preferred equity is the same as its book value. Estimate WACC for the company given that its effective
tax rate is 30%.
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