What equity proportion should be used when calculating WACC for a firm with $50 million in debt selling at 85% of par,$50 million in book value of equity,and $65 million in market value of equity?

Name: What equity proportion should be used when calculating WACC for a firm with $50 million in debt selling at 85% of par,$50 million in book value of equity,and $65 million in market value of equity?
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Question

Quizplus · Accepted Answer

W_e = $65m / [($50m × 0.85) + $65m] = 0.6047, or 60.47%

What Equity Proportion Should Be Used When Calculating WACC for a Firm