Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.4. Assuming the market value of debt equals its bookvalue, what weights should it use for its WACC calculation?Liabilities & EquityAssets$1,030DebtEquity$500$530The debt weight for the WACC calculation is %. (Round to two decimal places.)

Answer :Market value of debt = 500 Market value of equity = 530*1.4= 742 Weight of debt = 500 / (500…

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mat weights should it use for its WACC calculation? Assets $1,030 Debt Equity Liabilities & Equity $ $

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 49E

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Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.4. Assuming the market value of debt equals its book
value, what weights should it use for its WACC calculation?
Liabilities & Equity
Assets
$1,030
Debt
Equity
$500
$530
The debt weight for the WACC calculation is %. (Round to two decimal places.)

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