The Following Market Information Was Gathered for the ACME Corporation

question 61

Multiple Choice

The following market information was gathered for the ACME corporation.The common stock is selling for $40.00 per share and there are 100,000 shares outstanding.Retained earnings equal $400,000,preferred stock has 1,000 shares outstanding selling at $120.00 per share,and 500 outstanding long-term bonds are selling for $1,035.00 each.For purposes of estimating the firm's WACC,what are the market value weights of long-term debt,preferred stock,and equity?

• A)D/V = 11.16%,PS/V = 2.59%,and E/V = 86.25%
• B)D/V = 10.27%,PS/V = 2.38%,and E/V = 87.34%
• C)D/V = 10.78%,PS/V = 3.08%,and E/V = 86.14%
• D)D/V = 33.33%,PS/V = 33.33%,and E/V = 33.33%

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Definitions:

Ionization

The process by which an atom or a molecule acquires a negative or positive charge by gaining or losing electrons to form ions.

X-Rays

Electromagnetic radiation of high energy and very short wavelength, which is able to pass through many materials opaque to light, used especially for taking images of the inside of objects.

Cinemato

Likely related to cinematography or the art of making motion pictures, though not a common term on its own.

Nucl

Likely a shorthand or abbreviation for "nuclear," generally related to fields or substances associated with atomic nuclei, such as in nuclear medicine.