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Find the WACC of Apple Tell Computers. The total book value of the firm's equity is $10 million; book value per share is $20. The stock sells for a price of $30/share, and the cost of equity is 15%. The firm's bonds have a face value of $5 million and sell at a price of 110 percent of the face value. The yield to maturity on the bonds is 9%, and the firm's tax rate is 40%.

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Solution Summary

The solution explains the calculation of WACC

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The WACC = Proportion of debt X After tax cost of debt + Proportion of equity X cost of equity
The proportion are based on the market values
We first take up debt
The market ...

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