Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $350 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 $280 million and invest only $70 million in equity in the acquisition. What weights should Templeton use in computing the WACC for this acquisition? (round to one decimal place)

To compute the Weighted Average Cost of Capital (WACC) for this acquisition, Templeton needs to determine the weights of debt and equity in the capital structure. We can calculate the weights using the following formula:

Weight of Debt = Debt / (Debt + Equity)
Weight of Equity = Equity / (Debt + Equity)

In this case:
Debt = $280 million
Equity = $70 million

To get the weights, we substitute the given values into the formula:

Weight of Debt = $280 million / ($280 million + $70 million) = 0.8
Weight of Equity = $70 million / ($280 million + $70 million) = 0.2

Therefore, Templeton should use a weight of 0.8 for debt and a weight of 0.2 for equity when computing the WACC for this acquisition.