Florida Groves has 380 bonds outstanding that are selling at 97.4 percent of face value. The
firm also has 2,600 shares of preferred stock valued at $61 a share and 37,500 shares of common
stock valued at $19 a share. What weight should be assigned to the common stock when
computing the weighted average cost of capital?
=57.40%
-Please check the answers and show all work typed out. No excel or grid style please as I am on mobile.
Total Value of bond =380*1000*97.4%=$370120
Total Value of Equity=37500*19=$712500
Total Value of preferred stock=2600*61=$158600
Total Value =$370120+712500+158600=$1241220
weight assigned to the common stock=Total Value of Equity/Total Value
=$712500/1241220=57.40%
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