The company has 10 million shares of common stock and the


Balance sheet shows a total of S45 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%·This debt currently has a market value of$50 million. The company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share, stockholders' required return, rs, is 14.00%; and the firm's tax rate is 40%. The CFO thinks the WACC should be based on market value weights. Find these weights.

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Financial Management: The company has 10 million shares of common stock and the
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