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JKCPA
JKCPA, CPA
Category: Finance
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Experience:  Bachelors degree and CPA with Accounting experience.
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Templeton Extended Care Facilities, Inc. is considering the

Resolved Question:

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $440 million. Since the primary asset of this business is real estate, Templeton's management has determined that they will be able to borrow the majority of the money needed to buy the business. The current owners have no debt financing but Templeton plans to borrow $340 million and invest only $100 million in equity in the acquisition. What weights should Templeton use in computing the WACC for this acquisition?

The appropriate w d weight is ___%. (Round to one decimal place.)
Submitted: 4 years ago.
Category: Finance
Expert:  JKCPA replied 4 years ago.
Hi,

Thanks for the question.

The appropriate weight for debt (wd) = 340 / 440 = 77.3%

Hope this helps!

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