Question
MV Corporation has debt with market value of $ 100 million, common equity with a book value of $ 99 million, and preferred stock worth
MV Corporation has debt with market value of $ 100 million, common equity with a book value of $ 99 million, and preferred stock worth $ 22 million outstanding. Its common equity trades at $ 52 per share, and the firm has 6.1 million shares outstanding.
What weights should MV Corporation use in its WACC?
The debt weight for the WACC calculation is:
The preferred stock weight for the WACC calculation is:
The common equity weight for the WACC calculation is:
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Finance And Economics Discussion Series Should Risky Firms Offer Risk Free DB Pensions
Authors: United States Federal Reserve Board, David A. Love
1st Edition
128870500X, 9781288705009
