Answer:
Equity is 0.29
Debt is 0.64
Preferred stock 0.07
Explanation:
WACC=Ke*E/V+Kd*D/V*(1-t)*Kp*P/V
However, the requirements of the question is weights of the bonds,equity and preferred stock which are E/V,D/V and P/V respectively
E is the value of equity=2,000,000*$22=$44,000,000
D is the value of debt =100,000*$1000*96%=$96,000,000
P is the value of prefered stock=1,000,000*$10.50=$10,500,000
Total firm's finance(V) $150,500,000
E/V=$44,000,0000/$150,500,000=0.29
D/V=$96,000,0000/$150,500,000=0.64
p/v=$10,500,000/$150,500,000=0.07
