Binomial Tree Farm’s financing includes $5 million of bank loans and $6 million book (face) value of 10-year bonds, which are selling at 95% of par value. Its common equity is shown in Binomial’s Annual Report at $6.67. It has 500,000 shares of common stock outstanding which trade on the Wichita Stock Exchange at $18 per share. What debt ratio should Binomial use to calculate its WACC?
Binomial Tree Farm’s financing includes $5 million of bank loans and $6 million book (face) value of 10-year bonds, which are selling at 95% of par value. Its common equity is shown in Binomial’s Annual Report at $6.67. It has 500,000 shares of common stock outstanding which trade on the Wichita Stock Exchange at $18 per share. What debt ratio should Binomial use to calculate its WACC?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 16P: Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and...
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Binomial Tree Farm’s financing includes $5 million of bank loans and $6 million book (face) value of 10-year bonds, which are selling at 95% of par value. Its common equity is shown in Binomial’s Annual Report at $6.67. It has 500,000 shares of common stock outstanding which trade on the Wichita Stock Exchange at $18 per share. What debt ratio should Binomial use to calculate its WACC?
Note: Round your answer to 2 decimal places
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