Company X Has 2 Million Shares of Common Stock Outstanding

question 83

Multiple Choice

Company X has 2 million shares of common stock outstanding at a book value of $2 per share.The stock trades for $3.00 per share.It also has $2 million in face value of debt that trades at 90% of par.What is its ratio of debt to value for WACC purposes?(Use the values in dollar.)

• A)23.08%
• B)28.6%
• C)31.0%
• D)33.3%

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Definitions:

Liberty Loans

War bonds that were sold in the United States to support the allied cause during World War I.

Robert Goldstein

A filmmaker and producer best known for his silent film "The Spirit of '76," which faced controversy and censorship during World War I.

Spirit of '76

Symbolizes American patriotism and the revolutionary spirit associated with the year 1776.

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The movement of over six million African Americans from the rural Southern United States to urban areas in the North and West, from approximately 1916 to 1970, in search of better economic opportunities.