Solar Shades has 8.3 million shares of common stock outstanding, 4.3 million sha

Question

Solar Shades has 8.3 million shares of common stock outstanding, 4.3 million shares of preferred stock outstanding, and 13 thousand bonds. If the common shares are selling for $13.30 per share, the preferred share are selling for $30.30 per share, and the bonds are selling for 104.97 percent of par, what would be the weight used for equity in the computation of Solar Shade's WACC?

Solar Shades has 8.3 million shares of common stock outstanding, 4.3 million shares of preferred stock outstanding, and 13 thousand bonds. If the common shares are selling for $13.30 per share, the preferred share are selling for $30.30 per share, and the bonds are selling for 104.97 percent of par, what would be the weight used for equity in the computation of Solar Shade's WACC?

Explanation / Answer

Total value of common stock=(8.3*13.3)=$110.39million

Total value of preferred stock=(4.3*30.30)=$130.29 million

Total value of bonds=13000*(1000*104.97%)=$13.6461million

Total=$254.3261milllion

Hence weight or equity=(110.39/254.3261)

which is equal to

=43.40%(Approx).

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