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Templeton Extended Care Facilities Inc is considering the acquisition

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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: 2 years ago.
Category: Single Problem
Expert:  linda_us replied 2 years ago.

Here is your solution

 

 

 

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

 

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

 

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Linda

linda_us, Master's Degree
Category: Single Problem
Satisfied Customers: 7107
Experience: Business Analyst and Solution Consultant with over 9 years of experience.
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