The Following Information Comes from the Balance Sheet of Roamer

question 7

Multiple Choice

The following information comes from the balance sheet of Roamer Enterprises. The value of common stock is $60,000, retained earnings equals $40,000, total common equity equals $100,000, preferred stock has a value of $10,000 and long-term debt totals $120,000. For purposes of estimating the firm's WACC, what are the weights of long-term debt, preferred stock, and equity?

• A) D/V = 52.17%, PS/V = 43.48%, and E/V = 4.35%
• B) D/V = 52.17%, PS/V = 4.35%, and E/V = 43.48%
• C) D/V = $120,000, PS/V = $10,000, and E/V =$100,000
• D) There is not enough information to answer this question.

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Definitions:

Glucagon Release

The process in which glucagon, a hormone that raises blood glucose levels, is secreted by the alpha cells of the pancreas in response to low blood sugar.

Pancreas

An organ in the digestive system and endocrine system, responsible for secreting digestive enzymes and insulin.

Acinar Cells

Cells in the pancreas that produce digestive enzymes, which are secreted into the small intestine to aid in the digestion of food.

Gamma Cells

Gamma cells, often referred to in the context of the pancreas as pancreatic gamma cells, are a type of cell responsible for the regulation of certain hormones, although less commonly discussed compared to alpha and beta cells.