5 pts Question9 Sapp Truckings balance sheet shows a total o

5 pts Question9 Sapp Trucking\'s balance sheet shows a total of non-callable $45 million long- term debt with a coupon rate of 7% and a yield to maturity of 6%. This debt currently has a market value of $50 million. The balance sheet also shows that 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 market value of equity (stock price) is $20 per share. Additionally, stockholders\' required return is 12.1%, and the firm\'s tax rate is 40%. What is the company\'s WACC based on market value weighting? Your answer should be between 9.72 and 12.50, rounded to 2 decimal places with no special characters. D Question 10 5 pts FS F& F7 F8

Solution

WACC = 10.40%

	Amount	weight	cost	weight*cost
equity	200.00	0.8000	12.1000%	0.0968
debt	50.00	0.2000	3.6000%	0.0072