Solar Shades has 6.0 million shares of common stock outstanding, 5.0 million shares of preferred stock

Solar Shades has 6.0 million shares of common stock outstanding, 5.0 million shares of preferred stock outstanding, and 20 thousand bonds. If the common shares are selling for $29.10 per share, the preferred share are selling for $31.00 per share, and the bonds are selling for 104.90 percent of par, what would be the weight used for common stock in the computation of Solar Shade’s WACC?

(6,000,000 × 29.10)/(6,000,000×29.10 + 5,000,000×31.00 + 20,000×1.0490×1,000)  = 174.6M/350.6M = 49.80%

 

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Particulars Numbers Price Value Weights
Common Stock   6,000,000.00 29.1 174600000 49.80%
Preferred Stock   5,000,000.00 31 155000000 44.21%
Bond        20,000.00 104.90%   20,980,000.00 5.98%
Total 350580000