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

---

Definitions:

Dissolve

The process of a substance becoming incorporated into a liquid to form a solution, typically through physical and chemical interactions.

Dissociate

Ionization in which ions are dissolved in water and the cations and anions are surrounded by water molecules.

Charge

In physics, charge refers to a property of matter that causes it to experience a force when near other electrically charged matter; there are two types, positive and negative, which attract each other.

Solvent

Liquid that holds another substance in solution.