Town Crier has 6.8 million shares of common stock outstanding, 3.8 million share

Question

Town Crier has 6.8 million shares of common stock outstanding, 3.8 million shares of preferred stock outstanding, and 28.00 thousand bonds. If the common shares are selling for $29.90 per share, the preferred share are selling for $17.30 per share, and the bonds are selling for 96.82 percent of par, what would be the weight used for equity in the computation of Town Crier's WACC?

A). 63.98%

B). 33.33%

C). 68.65%

D). 66.67%

Town Crier has 6.8 million shares of common stock outstanding, 3.8 million shares of preferred stock outstanding, and 28.00 thousand bonds. If the common shares are selling for $29.90 per share, the preferred share are selling for $17.30 per share, and the bonds are selling for 96.82 percent of par, what would be the weight used for equity in the computation of Town Crier's WACC?

Explanation / Answer

Total value of common stock=(6.8*29.9)=$203.32 million

Total value of preferred stock=(3.8*17.30)=$65.74million

Total value of bonds=28000*(1000*96.82%)=$27.1096million

Total value=$296.1696 million

Hence weight of equity=(203.32/296.1696)

=68.65%(Approx).

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