这题

问题如下：

Company Z has the following on the right-hand side of its balance sheet:

• Bonds $500,000
• Common stock (20,000 shares) $500,000
• Total liabilities and equity $1,000,000

The price of Company Z stock is currently $40 per share. The required return before tax on debt is 5%, and the required return on equity is 10%.

In calculating WACC for Company Z, the weight for debt using book values for the balance sheet components is likely to be ________________ than the weight for debt using market values for the balance sheet components.

选项：

A.

lower

B.

the same

C.

higher

解释：

C is correct. The book value weights are computed as follows:

$Wd = \frac{500,000}{1,000,000} = 0.50$

$We = \frac{500,000}{1,000,000} = 0.50$

The market value of equity is equal to $40 × 20,000 shares = $800,000.

The market value weights are computed as follows:

$Wd = \frac{500,000}{1,300,000} = 0.38$

$We = \frac{800,000}{1,300,000} = 0.62$

Thus, the book value weight for debt (0.50) is higher than the market value weight (0.38). ​