The following information comes from the balance sheet of Roamer Enter

The following information comes from the balance sheet of Roamer Enterprises.

The value of common stock is $60,000, retained earnings equal $40,000, total common equity equals $100,000, preferred stock has a value of $10,000 and long-term debt totals $120,000. For purposes of estimating the firm’s WACC, what are the weights of long-term debt, preferred stock, and equity?
A) D/V = 52.17%, PS/V = 43.48%, and E/V = 4.35%
B) D/V = 52.17%, PS/V = 4.35%, and E/V = 43.48%
C) D/V = $120,000, PS/V = $10,000, and E/V =$100,000
D) There is not enough information to answer this question.

ANSWER

Answer: B
Explanation: B) D/V = $120,000/$230,000 = 52.17%, P/V = $10,000/$230,000 = 4.35%,
E/V = $100,000/$230,000 = 43.48%.