11-21 WACC Weights BetterPie Industries has 3 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 10,000 bonds. If the common shares are selling for $47 per share, the preferred shares are selling for $24.50 per share, and the bonds are selling for 99 percent of par, what would be the weights used in the calculation of BetterPie's WACC? (LG11-4Q) 11-25 Firmwide versus Project-Specific WACCs An all-equity firm is considering the projects shown below. The T-bill rate is 4 percent and the market risk premium is 7 percent. If the firm uses its current WACC of 12 percent to evaluate these projects, which project(s), if any, will be incorrectly rejected? (LG11-60) Project Expected Return Beta A 8.0% 0.5 B 19.0 1.2 C 13.0 1.4 D 17.0 1.6 11-27 Divisional WACCs Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions. A through D, with average betas for each division of 0.6, 1.0, 1.3, and 1.6, respectively. If all current and future projects will be financed with half debt and half equity, and if the current cost of equity (based on an average firm beta of 1.0 and a current risk-free rate of 7 percent) is 13 percent and the after-tax yield on the company's bonds is 8 percent, what will the WACCs be for each division? (LG11-70)