Again referring to WIllerton of the two previous problems, assume the firm’s cost of retained earnings is 11% and its marginal tax rate is 40%, calculate its WACC using its book value based on capital structure ignoring flotation costs. Make the same calculation using the market value based on capital structure. How significant the difference?,,,,,Previous 2 questions:,,Willerton Industries Inc. has the following balances in its capital accounts as of 12/31/x3,,Long term debt $65,000,000,Preferred stock $15,000,000,Common Stock $40,000,000,Paid in Excess $15,000,000,Retained Earnings $37,500,000,,2nd previous question:,Referring to WIllerton Industries of the previous problem, the company’s long term debt is comprised of 20-year $1000 face value bonds issued seven years ago at an 8% coupon rate. The bonds are now selling to yield 6%. Willerton’s preferred is from a single issue of $100 par value, 9% preferred stock that is now selling to yield 8%. Willerton has four million shares of common stock outstanding at a current market price of $31. Calculate Willerton’s market value based capital structure.
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