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MV Corporation has debt with market value of $100 million, common equity with a book value of $100 million, and preferred stock worth $20 million outstanding. Its common equity trades at $50 per share,
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MV Corporation has debt with market value of $100 million, common equity with a book value of $100 million, and preferred stock worth $20 million outstanding. Its common equity trades at $50 per share, and the firm has 6 million shares outstanding. What weights should MV Corporation use in its WACC

User Tgebarowski
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Answer:

Market value of Common Stock

Number of stock 6 million

Market price per share $50

Market value of Common Stock $300 million

Weights for various sources

Source Market % of Total Value

Debt 100 23.81% [100/420*100]

Preferred 20 4.76% [20/420*100]

Common 300 71.43% [300/420*100]

Total 420 100%

User Anatoliy
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