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Company A has 150,000 bonds outstanding, each with a current market price of $980 (par value = $1,000). The company also has 3,000,000 shares of

Company A has 150,000 bonds outstanding, each with a current market price of $980 (par value = $1,000). The company also has 3,000,000 shares of common stock outstanding with a book value of $20 / share and a current market price of $36 / share and. The companys management expects the firms capital structure to stay the same in the future. What weights for debt and equity should the company use to calculate the WACC?

Debt Equity

1.

57.65% 42.35%

2.

51.65% 48.35%

3.

55.65% 44.35%

4.

53.65% 46.35%

5.

50.65% 49.35%

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