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Inessa [10]
3 years ago
13

Tom and Jerry's has 2.4 million shares of common stock outstanding, 2.4 million shares of preferred stock outstanding, and 14.00

thousand bonds. If the common shares are selling for $13.40 per share, the preferred share are selling for $10.40 per share, and the bonds are selling for 99.96 percent of par, what would be the weight used for common stock in the computation of Tom and Jerry's WACC
Business
1 answer:
3241004551 [841]3 years ago
6 0

Answer:

Tom and Jerry's

The weight used for common stock in the computation of Tom and Jerry's WACC is:

= 45.22%

Explanation:

a) Data and Calculations:

                                               Common   Preferred    Bonds

                                                  Stock         Stock

Outstanding number               2.4 m         2.4 m         14,000

Market price per share           $13.40      $10.40         $999.6

Total value                               $32.16 m  $24.96 m    $13,994,400

Total value of stock and bonds = $71,114,400

Weight of common stock = $32.16/$71.1144 * 100 = 45.22%

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Athena Company provides employee health insurance that costs $15,100 per month. In addition, the company contributes an amount e
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