Problem

Weight of Debt OMG Inc. has 4 million shares of common stock outstanding, 3 million shares...

Weight of Debt OMG Inc. has 4 million shares of common stock outstanding, 3 million shares of preferred stock outstanding, and 5 thousand bonds.  If the common shares are selling for $17 per share, the preferred share are selling for $26 per share, and the bonds are selling for 108 percent of par, what  weight should you use for debt in the computation of OMG’s WACC?

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Solutions For Problems in Chapter 11