Top Posters
Since Sunday
17
6
5
s
5
t
5
s
5
9
5
g
5
h
5
l
5
o
5
f
5
Home Q & A Board Other Fields Homework Help Business
New Topic  
stranahan stranahan
wrote...
Go to Answer
Posts: 3324
Rep: 10 0
6 years ago
The following market information was gathered for the ACME corporation. The common stock is selling for $40.00 per share and there are 100,000 shares outstanding. Retained earnings equal $400,000, preferred stock has 1,000 shares outstanding selling at $120.00 per share, and 500 outstanding long-term bonds are selling for $1,035.00 each. For purposes of estimating the firm's WACC, what are the market value weights of long-term debt, preferred stock, and equity?
A) D/V = 10.27%, PS/V = 2.38%, and E/V = 87.34%
B) D/V = 10.78%, PS/V = 3.08%, and E/V = 86.14%
C) D/V = 11.16%, PS/V = 2.59%, and E/V = 86.25%
D) D/V = 33.33%, PS/V = 33.33%, and E/V = 33.33%
Textbook 
Financial Management: Core Concepts

Financial Management: Core Concepts


Edition: 2nd
Author:
Read 142 times
2 Replies
Replies
Answer verified by a subject expert
torchunicycletorchunicycle
wrote...
#1
Posts: 348
Rep: 54 0
6 years ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
C -- E = $40 × 100,000 shares = $4,000,000, P = $120 × 1,000 shares = $120,000, D = $1,035 × 500 bonds = $517,500. E/V = $4,000,000/$4,637,500 = 86.25%, P/V = $120,000/$4,637,500 = 2.59%, D/V = $517,500/$4,637,500 = 11.16%

Related Topics

stranahan Author
wrote...
#2
6 years ago
Thanks Smiling Face with Open Mouth and Tightly-closed Eyes
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  308 People Browsing
 260 Signed Up Today
Start New Topic Take the Tour Study Tips Study ToolsNew Topics Trending Browse by Textbook
Related Images
  
 682
  
 335
  
 43
Your Opinion
Which 'study break' activity do you find most distracting?
Votes: 456
Previous poll results: Does a gender wage gap exist in America?