Sports Corp has 11.5 million shares of common stock outstanding, 6.5 million sha

Question

Sports Corp has 11.5 million shares of common stock outstanding, 6.5 million shares of preferred stock outstanding, and 2.5 million bonds. If the common shares are selling for $26.5 per share, the preferred share are selling for $14.0 per share, and the bonds are selling for 96.85 percent of par, what would be the weight used for equity in the computation of Sports's WACC?

Sports Corp has 11.5 million shares of common stock outstanding, 6.5 million shares of preferred stock outstanding, and 2.5 million bonds. If the common shares are selling for $26.5 per share, the preferred share are selling for $14.0 per share, and the bonds are selling for 96.85 percent of par, what would be the weight used for equity in the computation of Sports's WACC?

Explanation / Answer

b 10.82% as shown below

Number Price Total Weights Debt      2,500,000.00                   968.50              2,421,250,000.00      0.8595 Preffered Stock      6,500,000.00                     14.00                    91,000,000.00      0.0323 Equity    11,500,000.00                     26.50                  304,750,000.00      0.1082              2,817,000,000.00           1.00 Note :Assuming par value of bond is 1000

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