Question

Penn Lab Co. has common stocks with a market value of $5,350,000.00 and has outstanding debt...

Penn Lab Co. has common stocks with a market value of $5,350,000.00 and has outstanding debt with a market value of $2,960,000.00. The rate of return on the stock is 13.45% and the Yield-to-Maturity on the debt is 9.60%. Answer the following questions if the tax rate is 32.00%! a. What is the Firm Value?

b. What is the firm's capital structure weights? Note: Do not round your intermediate calculations and enter your final answers as rounded to 4 decimal places (e.g., 0.1616)!

c. What is the firm's Weighted Average Cost of Capital (WACC)? Note: Do not round your intermediate calculations (keep at least 4 decimal places, e.g., 0.1616)! Enter your final answers as a percent rounded to 2 decimal places (e.g., 32.16)!

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Answer #1

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