Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market s
1 answer:
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Answer:
87.18%
Explanation:
Equity = Common stock + Preferred stock.
We know, WACC =
Equity can further be broken into two pieces = Common + Preferred.
In this case, as we do not have any rate of return. We will add all the equity and debt. Then divide the total equity by the total capital structure.
Total capital structure = Common stock + Preferred stock + debt
Total capital structure = 2,000,000 x $26 + 1,000,000 x $14 + 10,000 x 0.97 x $1,000
Total capital structure = $(52,000,000 + 14,000,000 + 9,700,000)
Total capital structure = $75,700,000
Total equity = 2,000,000 x $26 + 1,000,000 x $14 = $66,000,000
the weight would be used for equity in the computation of FarCry’s WACC
=
=
= 87.18%