Sports Corp has 11.2 million shares of common stock outstanding, 6.2 million shares of preferred stock outstanding

Sports Corp has 11.2 million shares of common stock outstanding, 6.2 million shares of preferred stock outstanding, and 2.2 million bonds. If the common shares are selling for $26.2 per share, the preferred share are selling for $13.7 per share, and the bonds are selling for 96.88 percent of par, what would be the weight used for common stock in the computation of Sports’s WACC?

 

Particulars Numbers Price Value Weights
Common Stock   11,200,000.00 26.2 293440000 11.69%
Preferred Stock     6,200,000.00 13.7 84940000 3.38%
Bond     2,200,000.00 96.88%   2,131,360,000.00 84.92%
Total 2509740000

(11,200,000 × 26.2)/(11,200,000 × 26.2 + 6,200,000 × 13.70 + 2,200,000 × .9688 × 1,000) = 293.44M/2509.74M = 11.69%

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