Paper Exchange Has 80 Million Shares of Common Stock Outstanding

question 74

Multiple Choice

Paper Exchange has 80 million shares of common stock outstanding, 60 million shares of preferred stock outstanding, and 50 thousand bonds. If the common shares are selling for $20 per share, the preferred shares are selling for $10 per share, and the bonds are selling for 105 percent of par, what would be the weight used for preferred stock in the computation of Paper's WACC?

• A) 26.64 percent
• B) 27.27 percent
• C) 33.33 percent
• D) 42.84 percent

---

Definitions:

Midaxillary Line

An imaginary line running vertically down the surface of the body passing through the apex of the axilla (armpit).

Cardiology

The study of the heart and its diseases.

Voltage

A measure of electromotive force.

Electromotive Force

A difference in potential that provides the energy per unit charge necessary to move charge from one point to another, commonly used in relation to electric circuits.