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Templeton Extended Care Facilities Inc is considering the acquisition

 

Customer Question

Templeton Extended Care Facilities Inc is considering the acquisition of a chain of cemetaries for $360 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 $260 million and invest only $100 million in equity in the acquisition. What weights should Templeton use in computing the WACC for this acquisition? Round to one decimal place.

Submitted: 354 days and 2 hours ago.
Category: Single Problem
Value: $25
Status: CLOSED

Accepted Answer

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Expert:  linda_us replied 354 days and 2 hours ago.

Here is your solution

 

 

 

Weight of debt =(260/360) = 72.2%

 

Weight of Equity= (100/360)= 27.8%

 

I am online and I can help you with your other questions. You can request me by writing "FOR LINDA" in front of your post.:)

 

Regards

 

Linda

linda_us41051.812878669

Expert TypeMaster's Degree
Category: Single Problem
Pos. Feedback: 100.0 %
Accepts: 605
Answered: 5/22/2012

Experience: Business Analyst and Solution Consultant with over 9 years of experience.

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