WhackAmOle has 2 million shares of common stock outstanding, 1.5 million shares
ID: 1171469 • Letter: W
Question
WhackAmOle has 2 million shares of common stock outstanding, 1.5 million shares of preferred stock outstanding, and 50,000 bonds. Assume the common shares are selling for $60 per share, the preferred shares are selling for $49.00 per share, and the bonds are selling for 103 percent of par.
What would be the weights used in the calculation of WhackAmOle’s WACC? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
WhackAmOle has 2 million shares of common stock outstanding, 1.5 million shares of preferred stock outstanding, and 50,000 bonds. Assume the common shares are selling for $60 per share, the preferred shares are selling for $49.00 per share, and the bonds are selling for 103 percent of par.
Explanation / Answer
Total value of common stock=(2*60)=$120million
Total value of preferred stock=(1.5*49)=$73.5million
Total value of bonds=50000*(1000*103%)=$51.5million
Total value =$245million
Equity weight(120/245) 48.98% Preferred stock(73.5/245) 30% Debt weight(51.5/245) 21.02%(Approx).Related Questions
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