A Firm Has 12,000 Shares of Common Stock Outstanding with a Book

question 66

Multiple Choice

A firm has 12,000 shares of common stock outstanding with a book value of $20 per share and a market value of $39.There are 5,000 shares of preferred stock with a book value of $22 and a market value of $26.There is a $400,000 face value bond issue outstanding that is selling at 87% of par.What weight should be placed on the preferred stock when computing the firm's WACC?

• A) 7.25%
• B) 13.74%
• C) 11.48%
• D) 15.09%

---

Definitions:

Cerebellum

A part of the brain at the back of the skull, which regulates movement, posture, and balance.

Traumatic Head Injury

Physical trauma to the head that can lead to various levels of brain injury, ranging from minor concussions to severe brain damage.

Corpora Quadrigemina

A structure in the midbrain consisting of four bodies, the superior and inferior colliculi, involved in visual and auditory processes.

Medulla Oblongata

The lower portion of the brainstem involved in autonomous functions such as breathing and blood pressure regulation.