Regarding the amount of cash raised by issuing bond in calculating the WACC
I encountered a rather interesting problem which involves calculating the WACC for a company.
The question goes like this, the company currently has say 10 million euros of debt, traded at 90% of par, yield to maturity = 9%. equity is 10 million euros.
As I understand, the cost of debt in this case is 9% * (1 - T) because this is the effective rate considering that this company only sold the bond at 9 million euros.
The problem I am having is determining the actual amount of debt that will be used to calculate the weight % for the WACC. On one hand, I think I should use 9 million euros divided by 19 million total to get that weight, it would make sense because it is the actual amount of cash that the company has to invest in inventories, machineries etc. On the other hand, is there any reason to use 10 million euros of debt to calculate the weight since it is the par value of the debt that this company is trying to raise and since they sold it only at 9 million, their cost of using debt is 9% (which is actually higher than the coupon rate)?
I tend towards using the real amount of money that this company raised (9 million) but I am a bit confused to be honest.
I appreciate all inputs. Thank you.