Elephant Company has 200,000 shares of common stock outstanding. It just paid a common dividend of $5
Question:
Elephant Company has 200,000 shares of common stock outstanding. It just paid a common dividend of $5 per share, and its common stock currently sells for $140 per share. Elephant Company has 25,000 shares of preferred stock outstanding. The preferred stock pays and annual dividend of $2.00 per share and currently sells for $30 per share. Elephant Company has 10,000 7% bonds outstanding. The bonds have a face value of $1,000 and mature in 10 years. The bonds currently sell for $865. Elephant Company has a Beta of .80, and its marginal tax rate is 40%. The risk free rate is 4%. The required return on the market is 12%. What is the Debt Weight for calculating Elephant Company's WACC?
Question 46 options:
19.62%
23.13%
21.89%
18.10%
20.04%
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones