Covid Contractors has 500,000 shares of common stock outstanding, 200,000 shares of preferred stock outstanding, and 20,000 bonds ($1,000 par). The common shares are selling for $40.00 per share, the preferred share are selling for $50 per share, and the bonds are selling at par.  a. What would be the weight used for common stock in the computation of Team's WACC?    b. What would be the weight used for preferred stock in the computation of Team's WACC?    c. What would be the weight used for bonds in the computation of Team's WACC?

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A: Debt is the obligation for the company reported in the balance sheet of the company.

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A: Cost of capital for the preferred stock = Dividend / Price

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A: When the shares are sold for more than its face value, the excess is credit to "Paid in capital in…

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A: The objective of the question is to calculate the weight of preferred stock in the Weighted Average…

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A: Capital weight refers to the proportion of the components that are being assigned as per the value…

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A: Value of stock = $59.75 per shareNumber of shares outstanding = 3,500,000Value of debt = $24,000,000

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A: WACC stands for a weighted average cost of capital, which is the total cost of a company's capital…

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A: Equity value = $660000 Number of shares = 13000 Stock dividend = 10%

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.