Skyline Airways has 3.5 million shares of common stock outstanding, with a book value of $3.00 per share. The stock currently trades for $4.20 per share. The company also has $3.5 million in face value debt, which trades at 105% of par value. What is its debt-to-equity (D/E) ratio for WACC purposes?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
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What is its debt to equity ratio for WACC purposes? Accounting

Skyline Airways has 3.5 million shares of common stock outstanding,
with a book value of $3.00 per share. The stock currently trades for
$4.20 per share. The company also has $3.5 million in face value debt,
which trades at 105% of par value. What is its debt-to-equity (D/E)
ratio for WACC purposes?
Transcribed Image Text:Skyline Airways has 3.5 million shares of common stock outstanding, with a book value of $3.00 per share. The stock currently trades for $4.20 per share. The company also has $3.5 million in face value debt, which trades at 105% of par value. What is its debt-to-equity (D/E) ratio for WACC purposes?
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