WhackAmOle has 3 million shares of common stock outstanding, 2.0 million shares
ID: 2613422 • Letter: W
Question
WhackAmOle has 3 million shares of common stock outstanding, 2.0 million shares of preferred stock outstanding, and 75,000 bonds. Assume the common shares are selling for $65 per share, the preferred shares are selling for $59.00 per share, and the bonds are selling for 105 percent of par.
What would be the weights used in the calculation of WhackAmOle’s WACC? (Do not round intermediate calculations and round your answers to 2 decimal places.)
What would be the weights used in the calculation of WhackAmOle’s WACC? (Do not round intermediate calculations and round your answers to 2 decimal places.)
Explanation / Answer
Market Value of Common Stock = 3Milion * 65 = $ 195 Million
Market value of Preferred Stock = 2 Miillion * 59 = $ 118 Million
Market Value of Bond = 0.075 Million *1000*105% = $ 78.75 Million
Total Market Value = 195+118+78.75 = $ 391.75 Million
Equity weight = 195/391.75 = 49.78%
Preferred stock weight= 118/391.75 = 30.12%
Debt weight = 78.75/391.75 = 20.10%
Answer
Equity weight 49.78% Preferred stock weight 30.12% Debt weight 20.10%Related Questions
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