What weight should be placed on the preferred stock

Reference no: EM133332224

Question 1: Passmore Propane has 19,000 shares of common stock outstanding with a current price of $34 per share. It has 7,000 shares of preferred stock outstanding that sells at $16 per share. Passmore also has bonds outstanding with a total face value of $400,000 that sell at 106 percent of par. What weight should be placed on the preferred stock when estimating Passmore's weighted average cost of capital (WACC)? Answer Format: Positive percentage rounded to 2 decimal places. (An answer of 10.125% would be entered as 10.13)

Question 2: You just won the lottery. The lottery commission will make 15 annual payments of $23,000 with the ?rst payment being paid to you today. If your cost of capital is 5.5%, what is the present value of your prize money? Answer Format: Positive number rounded to 2 decimal places. (An answer of $100125 should be entered as 100.13).

Reference no: EM133332224

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