Given Are the Following Data for Golf Corporation

question 31

Multiple Choice

Given are the following data for Golf Corporation:
Market price/share = $12; Book value/share = $10; Number of shares outstanding = 100 million; Market price/bond = $800; Face value/bond = $1,000; Number of bonds outstanding = 1 million. Calculate the proportions of debt (D/V) and equity (E/V) for Golf Corporation that you should use for estimating its weighted average cost of capital (WACC) .

• A)40 percent debt and 60 percent equity
• B)50 percent debt and 50 percent equity
• C)45.5 percent debt and 54.5 percent equity
• D)66.7 percent debt and 33.3 percent equity

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