Question
#1 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
#1 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 sell for $29 per share, the preferred shares sell for $15.50 per share, and the bonds sell for 98 percent of par.
What weight should you use for preferred stock in the computation of FarCrys WACC? (Round your answer to 2 decimal places.)
#2) Suppose that TapDance, Inc.s capital structure features 60 percent equity, 40 percent debt, and that its before-tax cost of debt is 7 percent, while its cost of equity is 12 percent. Assume the appropriate weighted average tax rate is 34 percent.
What will be TapDances WACC? (Round your answer to 2 decimal places.)
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