4.66% 9.20% 9.09% 13.04% JackITs has 5.6 million shares of common stock outstand

Question

4.66%

9.20%

9.09%

13.04%

JackITs has 5.6 million shares of common stock outstanding, 1.6 million shares of preferred stock outstanding, and 26.00 thousand bonds. If the common shares are selling for $28.60 per share, the preferred shares are selling for $14.10 per share, and the bonds are selling for 97.94 percent of par, what would be the weight used for equity in the computation of JackIT's WACC?

77.50%

76.93%

66.67%

33.33%

Rose has preferred stock selling for 98.8 percent of par that pays a 9.2 percent annual coupon. What would be Rose's component cost of preferred stock?

Explanation / Answer

Cost of preferred stock = Annual dividend/Stock price

= $9.20/$98.80

= 9.31%

This was not given as option but correct answer. Else choose nearest option 9.20%

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