V Corporation has debt with market value of $97 million, common equity with a book value of $97 million, and preferred stock worth $22 million outstanding. Its common equity trades at $48 per share, and the firm has 6.2 million shares outstanding. What weights should MV Corporation use in its WACC? a. The debt weight for the WACC calculation is __% b. The preferred stock weight for the WACC calculation is __% c. The common equity weight for the WACC calculation is __% **round to two decimal places**

V Corporation has debt with market value of $97 million, common equity with a book value of $97 million, and preferred stock worth $22 million outstanding. Its common equity trades at $48 per share, and the firm has 6.2 million shares outstanding. What weights should MV Corporation use in its WACC? a. The debt weight for the WACC calculation is % b. The preferred stock weight for the WACC calculation is % c. The common equity weight for the WACC calculation is __% round to two decimal places

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter3: Analysis Of Financial Statements

Section: Chapter Questions

Problem 1STP

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The Rivoli Company has no debt outstanding, and its financial position is given by the following data: What is Rivoli’s intrinsic value of operations (i.e., its unlevered value)? What is its intrinsic stock price? Its earnings per share? Rivoli is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, its cost of equity, rs, will increase to 12% to reflect the increased risk. Bonds can be sold at a cost, rd, of 7%. Based on the new capital structure, what is the new weighted average cost of capital? What is the levered value of the firm? What is the amount of debt? Based on the new capital structure, what is the new stock price? What is the remaining number of shares? What is the new earnings per share?
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MV corporation has debt with market value of $101 million, common equity with a book value of $102 million, preferred stock worth $17 million outstanding. It’s common equity trades at $46 per share, and the firm has 5.6 million shares outstanding. What weights should MV corporation use in its WACC