Accessory Industries Has 2 Million Shares of Common Stock Outstanding

question 99

Multiple Choice

Accessory Industries has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 100 thousand bonds. If the common shares are selling for $22 per share, the preferred shares are selling for $10.50 per share, and the bonds are selling for 96 percent of par ($1,000) , what would be the weights used in the calculation of Accessory's WACC for common stock, preferred stock, and bonds, respectively?

• A) 33.33 percent, 33.33 percent, 33.33 percent
• B) 29.23 percent, 6.98 percent, 63.79 percent
• C) 64.52 percent, 32.26 percent, 3.22 percent
• D) 17.12 percent, 8.17 percent, 74.71 percent

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Definitions:

Dependent Child

A child who relies on another person for more than half of their support and qualifies for the potential of tax benefits for the supporting individual.

Full-Time Student

An individual who is enrolled in a post-secondary institution and meets the institution's requirements for full-time status.

Qualified Day Care Center

A facility that meets certain criteria and regulations to provide childcare services, often eligible for specific tax benefits.

EIC Formula

The Earned Income Credit Formula is a method used by the IRS to determine the amount of earned income credit a taxpayer is eligible for, based on income, filing status, and number of qualifying children.