Book Co. has 1.1 million shares of common equity with a par (book) value of $1.30, retained earnings of $30.8 million, and its shares have a market value of $49.52 per share. It also has debt with a par value of $18.8 million that is trading at 102% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC? a. What is the market value of its equity? The market value of the equity is $ million. (Round to two decimal places.)

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
Problem 1STP
Question
Book Co. has 1.1 million shares of common equity with a par (book) value of $1.30, retained earnings of $30.8 million,
and its shares have a market value of $49.52 per share. It also has debt with a par value of $18.8 million that is
trading at 102% of par.
a. What is the market value of its equity?
b. What is the market value of its debt?
c. What weights should it use in computing its WACC?
a. What is the market value of its equity?
The market value of the equity is $ million. (Round to two decimal places.)
Transcribed Image Text:Book Co. has 1.1 million shares of common equity with a par (book) value of $1.30, retained earnings of $30.8 million, and its shares have a market value of $49.52 per share. It also has debt with a par value of $18.8 million that is trading at 102% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC? a. What is the market value of its equity? The market value of the equity is $ million. (Round to two decimal places.)
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