Company A has 500,000 shares outstanding and the share price is $10, 10,000 bonds outstanding and the bonds are trading at 110 and the par value is $1,000, 10,000 preferred shares outstanding and they currently sell for $103 a share and have a par value of $100.

 A) Calculate the weight of debt, equity, and preferred in the capital structure?

 B) If the pre-tax cost of debt is 5%, the cost of preferred is 6% and the cost of equity is 8% what is the Weighted Average Cost of Capital or WACC? The tax rate is 20%.

Answer rating: 100% (QA)

A To calculate the weight of debt equity and preferred in the capital structure ... View the full answer