Binomial Tree Farm’s financing includes $6.40 million of bank loans and $7.40 million book (face) value...
Binomial Tree Farm’s financing includes $6.40 million of bank loans and $7.40 million book (face) value of 10-year bonds, which are selling at 90% of par value. Its common equity is shown in Binomial’s Annual Report at $8.07. It has 640,000 shares of common stock outstanding which trade on the Wichita Stock Exchange at $29 per share. What debt ratio should Binomial use to calculate its WACC? (Round your answer to 2 decimal places.)
Homework Answers
Debt ratio to be used=Total Debt/Total
Assets=(6.40+7.40*90%)/(6.40+7.40*90%+640000*29/10^6)
=0.41302973
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Binomial Tree Farm’s financing includes $6.40 million of bank
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