Problem Weight of Equity

FarCry Industries, a maker of telecommunications equipment, has 3 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares are selling for $29 per share, the preferred shares are selling for $15.50 per share, and the bonds are selling for 98 percent of par. What would be the weight used for equity in the computation of FarCry’s WACC?

Weight used = %

Problem Weight of Debt

OMG Inc. has 4 million shares of common stock outstanding, 3 million shares of preferred stock outstanding, and 5,000 bonds. Suppose the common shares are selling for $28 per share, the preferred shares are selling for $27 per share, and the bonds are selling for 108 percent of par.

What weight should you use for debt in the computation of OMG’s WACC?

Weight used = %