A firm has 1 million shares outstanding with a book value per share of $10 per share. The stock sells for a price of $20 per share. The firm’s bonds have a par value of $8 million and are currently...

A firm has 1 million shares outstanding with a book value per share of $10 per share. The stock sells for a price of $20 per share. The firm’s bonds have a par value of $8 million and are currently selling at a price of 120 percent of par. What is the appropriate proportion of equity to use in the WACC calculation?

• 
  
  71.4 percent
  
  


• 
  
  51.0 percent
  
  


• 
  
  55.6 percent
  
  


• 
  
  48.0 percent
  
  


• 
  
  67.6 percent