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What is the wacc based on the market value

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Spellman Transportation's balance sheet shows a total of non-callable $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $50 million. The company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share; stockholders' required return, Rs, is 14.00%; and the firm's tax rate is 40%. What is the WACC based on the market value weights of debt and equity?

Reference no: EM132154663

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