A firm has 29,000 shares of common outstanding with a market value of $45.5 per share and a book value of $26 per share. The firm also has 7,000 shares of preferred stock with a book value of $13.7 and a market value that's 99% of the book value. The firm has a $763,000 face value bond outstanding that is selling at 117% of par. What weight (P/V) should be placed on the preferred stock when computing the firm's WACC?

A firm has 29,000 shares of common outstanding with a market value of $45.5 per share and a book value of $26 per share. The firm also has 7,000 shares of preferred stock with a book value of $13.7 and a market value that's 99% of the book value. The firm has a $763,000 face value bond outstanding that is selling at 117% of par. What weight (P/V) should be placed on the preferred stock when computing the firm's WACC?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 11P

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