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far cry industries a maker of telecommunications equipment has 3 shares of common stock outstanding 1...

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Finance

far cry industries a maker of telecommunicationsequipment has 3 shares of common stock outstanding 1 million sharesof preferred stock outstanding and 10000 bonds suppose the commonshares sell for 29 per share, the proffered shares sell for 15.50per share and the bonds sell for 98 percent of par.

what weight should you use for preferred stock in thecomputation of far crys wacc?
weight used_____?

Answer & Explanation Solved by verified expert
3.9 Ratings (750 Votes)

In the present situation, market value are taken for consideration as follows.

securities

number of share

outstanding

market value per share

product

Weight (WACC)

common stock

                                         3,000,000

$                                  29.00

$          87,000,000

0.848699344

preferred stock

                                         1,000,000

$                                  15.50

$          15,500,000

0.151205056

bonds

                                               10,000

$                                    0.98

$                    9,800

0.01234587

$       102,509,800

WACC used for preferred stock is in bold text which is 0.1512 or 15.12%.
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far cry industries a maker of telecommunicationsequipment has 3 shares of common stock outstanding 1 million sharesof preferred stock outstanding and 10000 bonds suppose the commonshares sell for 29 per share, the proffered shares sell for 15.50per share and the bonds sell for 98 percent of par.what weight should you use for preferred stock in thecomputation of far crys wacc?weight used_____?

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