Far Cry Industries, a maker of telecommunications equipment, has 3 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares are selling for $25 per share, the preferred shares are selling for $13.50 per share, and the bonds are selling for 97 percent of par. What weight should you use for debt in the computation of FarCry s WACC?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter3: Evaluation Of Financial Performance
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Far Cry Industries, a maker of telecommunications equipment, has 3 million shares of
common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000
bonds. Suppose the common shares are selling for $25 per share, the preferred shares
are selling for $13.50 per share, and the bonds are selling for 97 percent of par.
What weight should you use for debt in the computation of FarCry s WACC?
Transcribed Image Text:Far Cry Industries, a maker of telecommunications equipment, has 3 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares are selling for $25 per share, the preferred shares are selling for $13.50 per share, and the bonds are selling for 97 percent of par. What weight should you use for debt in the computation of FarCry s WACC?
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