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analyst has obtained the following information Book value of long-term sources of capital: $25,000 Book value of common equity: $10,000 Book value of preferred stock: $5,000 company has 4,000 shares outstanding, which are currently trading at $5 per share. They also have 3,000 preferred shares outstanding which are currently trading at $2 per share. The yield on the debt equals the coupon rate. What is the weight of common equity used to determine the weighted average cost of capital A 56% B 80% C40% D67% E not determined

analyst has obtained the following information Book value of long-term sources of capital: $25,000 Book value of common equity: $10,000 Book value of preferred stock: $5,000 company has 4,000 shares outstanding, which are currently trading at $5 per share. They also have 3,000 preferred shares outstanding which are currently trading at $2 per share. The yield on the debt equals the coupon rate. What is the weight of common equity used to determine the weighted average cost of capital A 56% B 80% C40% D67% E not determined

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 8P
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analyst has obtained the following information
Book value of long-term sources of capital: $25,000
Book value of common equity: $10,000
Book value of preferred stock: $5,000
company has 4,000 shares outstanding, which are currently trading at $5 per share. They also have 3,000 preferred shares outstanding which are currently trading at $2 per share. The yield on the debt equals the coupon rate.
What is the weight of common equity used to determine the weighted average cost of capital
A 56%
B 80%
C40%
D67%
E not determined

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