Posted: March 6th, 2014

Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for…

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Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $410 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 $290 million and invest only $120 million in equity in the acquisition. What weights should Templeton use in computing the W ACC for this acquisition? The appropriate W d weight is D %. (Round to one decimal place.) The appropriate Wcs weight is D %. (Round to one decimal place.)

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