Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.5. Assuming the market value of debt equals its book value, what weights should it use for its WACC calculation? Assets Liabilities & Equity $1,000 Debt $400 Equity $600 The debt weight for the WACC calculation is %. (Round to two decimal places.) The equity weight for the WACC calculation is %. (Round to two decimal places.)
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Since the equity market-to-book ratio is 1.5, we can calculate the market value of equity by multiplying the book value of equity by 1.5. Market value of equity = Book value of equity * Equity market-to-book ratio Market value of equity = $400 * 1.5 Market value Show more…
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