A company is financed with 40% debt, 10% preferred stock, and 50% common stock. They have a WACC of 15%. During the year, their ROA was only 12%. Which of the following investors were hurt the most by these results? A. The Debt Holders B, The Preferred Shareholders C. The Common Shareholders D. All three are hurt to approximately the same extent. E. The Common and Preferred Shareholders were hurt by about the same amount, the Debt Holders to a much larger extent.
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A company is financed with 40% debt, 10% preferred stock, and 50% common stock. They have a WACC of 15%. During the year, their ROA was only 12%.
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