What weight should be used for the calculation

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Q1. Star Trek LLC has 8,000 bonds, two million shares of preferred stock outstanding and seven million shares of common stock outstanding. If the common shares are selling for $17 per share, the preferred shares are selling for $13 per share, and the bonds are selling for 105 percent of par, what weight (percentage) should be used for the calculation of the debt, for Star Trek's WACC?

Q2. Tony Stark has incurred some debt and he would like for you to figure out what the cost of this debt is. With the information given below, what would be his cost?

Tony Stark sold a $1,000 par value, non-callable bond that now has 15 years to maturity and an 8.50% annual coupon that is paid semiannually. The bond that his has sells for $1,025 and his tax rate is 35%.

Figure out the cost of debt so that Tony Stark can calculate his WACC.

Reference no: EM133076968

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