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?
(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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