Problem 11-13 Weight of Preferred Stock (LG11-4) FarCry Industries, a maker of telecommunications equipment, has 5 million shares of common stock outstanding, 2 million shares of preferred stock...



Problem 11-13 Weight of Preferred Stock (LG11-4)









FarCry Industries, a maker of telecommunications equipment, has 5 million shares of common stock outstanding, 2 million shares of preferred stock outstanding, and 20,000 bonds. Suppose the common shares sell for $26 per share, the preferred shares sell for $14.00 per share, and the bonds sell for 97 percent of par.











What weight should you use for preferred stock in the computation of FarCry’s WACC?
(Round your answer to 2 decimal places.)
















  Weight used



%










Problem 11-11 Weight of Debt (LG11-4)









FarCry Industries, a maker of telecommunications equipment, has 6 million shares of common stock outstanding, 4 million shares of preferred stock outstanding, and 45,000 bonds. Suppose the common shares are selling for $28 per share, the preferred shares are selling for $15.00 per share, and the bonds are selling for 99 percent of par.











What weight should you use for debt in the computation of FarCry’s WACC?
(Round your answer to 2 decimal places.)
















  Weight used



%









Problem 11-1 Cost of Equity (LG11-3)









Diddy Corp. stock has a beta of 1.3, the current risk-free rate is 3 percent, and the expected return on the market is 12.50 percent.













What is Diddy’s cost of equity?
(Round your answer to 2 decimal places.)














  Cost of equity



%




Jun 04, 2022
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