Chapter 15: Capital Structure: Basic Concepts

11. Security Market Value Explanation Debt $ 5.5 million 1.10 ( par value of $5 million Equity $15.0 million $30 per share ( 500,000 shares * Total $20.5 million *Number of shares = Since the firm is all-equity financed: asset beta = equity beta = 0.8. The WACC is the same as the cost of equity, which can be calculated using the CAPM: ................
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