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FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1...

FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares are selling for $26 per share, the preferred shares are selling for $14.00 per share, and the bonds are selling for 97 percent of par.

What would be the weight used for equity in the computation of FarCry’s WACC? (Round your answer to 2 decimal places.)
  Weight used %
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Answer #1


Weight for equity for WACC = Value of equity / Total Capital

= 52,000,000 / 75,700,000

Weight for equity for WACC = 68.69%

.

Working for each instrument value:

Particulars

Price

Quantity

Price x Quantity

Weight

Debt

970.00

10000

            9,700,000.00

12.81%

Preferred Share

14.00

1000000

          14,000,000.00

18.49%

Equity

26.00

2000000

          52,000,000.00

68.69%

Total Capital

         75,700,000.00
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