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QUESTION
(Market versus book value weights)Miami Distribution has 1,000 outstanding bonds that have a book value of $1,000 per bond and a market value of...
A3. (Market versus book value weights)Miami Distribution has 1,000 outstanding bonds that have a book value of $1,000 per bond and a market value of $1,200 per bond. Miami Distribution has 250,000 outstanding shares with a per-share book value of $40 and market value of $68. When estimating the WACC, what proportions of debt and equity capital should be used?
