Calculate the Weighted Average Cost of Preference Shares and Ordinary

question 17

Multiple Choice

Calculate the weighted average cost of preference shares and ordinary shares if there are: 1 million preference shares with market value of $2.50 each and an opportunity cost of 10.8%;10 million ordinary shares with market value of $4.50 each and an opportunity cost of 16.5%.

• A)15.4%
• B)16.9%
• C)16.2%
• D)None of the given options.

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Definitions:

Perpetual Inventory System

An approach to inventory management where updates are made continuously as inventory items are bought and sold.

Cost of Merchandise Sold

The total expense incurred to acquire goods that have been sold during a certain period.

Periodic Inventory System

An accounting method where inventory is physically counted at specific intervals, typically at the end of an accounting period, to determine the cost of goods sold and ending inventory.

Perpetual Inventory System

An inventory accounting method where transactions are recorded on the spot with the help of computerized point-of-sale systems and enterprise asset management tools.