Here is the condensed 2021 balance sheet for Find My WACC (FMW) Inc.
Current assets
202.1
$1,500,000
Net fixed assets
3,000,000
Total assets
4.500.000
Accounts payable and accruals
$1,000,000
Short-term debt
250,000
Long-term debt
1,250,000
Preferred stock (25,000 shares).
250,000
Common stock (70,000 shares)
1,400,000
Retained earnings
350,000
Total common equity.
1,750,000
Total liabilities and equity
4,500,000
1. FMW's common stock sells for $35.00 per share and the price of the company's preferred stock is $28.00 per
share. The book and market values of the company's debt (both short- and long-term) are the same. What are
the market value weights of the components of capital? In other words, what is the proportion of debt (wa),
preferred stock (wp), and common equity (we) in FMW's capital structure using market values. (HINTS: Debt
includes both short-term and long-term debt, equity includes both common stock and retained earnings, and all
calculations need to be on a market value basis.)