Carrie D's Has 6 Million Shares of Common Stock Outstanding

question 36

Multiple Choice

Carrie D's has 6 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 10 thousand bonds. If the common shares are selling for $15 per share, the preferred shares are selling for $28 per share, and the bonds are selling for 109 percent of par, what would be the weight used for common stock in the computation of Carrie D's WACC?

• A) 33.33 percent
• B) 57.36 percent
• C) 61.64 percent
• D) 75.00 percent

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Definitions:

Simple Regression

Simple regression is a statistical method used to examine the relationship between one independent variable and one dependent variable by fitting a linear equation to observed data.

Slope

The measure of the steepness or incline of a line, indicating the rate of change between two variables.

Mean Value

Mean value is the average of a set of numbers, calculated by dividing the sum of all values by the quantity of numbers.

Error Term

A variable in a statistical model that captures the difference between observed and predicted values.