Paper Exchange Has 10 Million Shares of Common Stock Outstanding

Multiple Choice

Paper Exchange has 10 million shares of common stock outstanding, 5 million shares of preferred stock outstanding, and 100 thousand bonds. If the common shares are selling for $25 per share, the preferred shares are selling for $10 per share, and the bonds are selling for 98 percent of par, what would be the weight used for preferred stock in the computation of Paper's WACC?

A) 12.00 percent
B) 12.56 percent
C) 5.00 percent
D) 3.33 percent