Company B is acquiring Company Z in an all cash deal during December 2020.

Company Z is in a different industry then Company B. The table below shows the projected capital structure strategy of the consolidated company.

Based on the information presented Weighted Average Cost of Capital model should be used to value the consolidated entity.

	2021	2022	2023	2024
Assets	$2,000,000	$2,400,000	$3,000,000	$3,600,000
Liabilities	$500,000	$400,000	$800,000	$500,000
Stockholders' Equity	$1,500,000	$2,000,000	$2,200,000	$3,100,000
Common Stock percentage of Stockholders' Equity	60%	80%	90%	95%
Preferred Stock percentage of Stockholders' Equity	40%	20%	10%	5%

Group of answer choices

True

False

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