Sports Corp has 10.3 million shares of common stock outstanding, 5.3 million sha

Question

Sports Corp has 10.3 million shares of common stock outstanding, 5.3 million shares of preferred stock outstanding, and 1.3 million bonds. If the common shares are selling for $25.3 per share, the preferred share are selling for $12.8 per share, and the bonds are selling for 96.97 percent of par, what would be the weight used for equity in the computation of Sports's WACC?

Which of the following is correct?

a.) 60.95%

b.) 16.40%

c.) 33.33%

d.) 19.62%

Sports Corp has 10.3 million shares of common stock outstanding, 5.3 million shares of preferred stock outstanding, and 1.3 million bonds. If the common shares are selling for $25.3 per share, the preferred share are selling for $12.8 per share, and the bonds are selling for 96.97 percent of par, what would be the weight used for equity in the computation of Sports's WACC?

Explanation / Answer

Market value Weights Common stock $                   260,590,000 16.40% 10300000*25.3 Debt $                1,260,610,000 79.33% 1300000*1000*96.97% Preferred stock $                     67,840,000 4.27% 5300000*12.8 Total $                1,589,040,000 100.00%

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