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Karo-lina-s [1.5K]
3 years ago
5

Johnny Come Lately Computers (JCMC) has 20,000 bonds outstanding, selling at 98 percent of par; 300,000 shares of stock outstand

ing, selling at $32.71 per share; and 50,000 shares of preferred stock, trading at $82 per share. What weight will common stock have in the computation of the firm's WACC?
Business
1 answer:
Marrrta [24]3 years ago
6 0

Answer:

61.82 %

Explanation:

For WACC calculation, we consider the Market Weight of Common Stock.

Market Weight of Common Stock = Market Value of Common Stock ÷ Total Market Value of Funding

                                                         = (300,000 × $32.71) ÷ (20,000 × 98 + 300,000 × $32.71 + 50,000 × $82)

                                                         = 61.82 %

Thus the weight of Common Stock will be 61.82 %

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Cash                                      Asset               37641

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Total                                                               <u>$66900</u>      <u>$66900</u>

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