Explore BrainMass

Explore BrainMass

    Find the WACC of William (Apple) Tell Computers

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Find the WACC of William (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 per share, and the cost of equity is 15 percent. The firm's bonds have a par value of $5 million and sell at a price of 110 percent of par. The yield to maturity on the bonds is 9 percent, and the firm's tax rate is 40 percent.

    © BrainMass Inc. brainmass.com December 15, 2022, 5:06 pm ad1c9bdddf
    https://brainmass.com/business/weighted-average-cost-of-capital/find-the-wacc-of-william-apple-tell-computers-61747

    Solution Preview

    A company's assets are financed by either debt or equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

    A firm's WACC is the overall required return on the firm as a whole and, as such, it is often used internally by company directors to determine ...

    Solution Summary

    WACC is described in this solution, including the equation to calculate it and the step by step methods of calculating it specific to this problem.

    $2.49

    ADVERTISEMENT