Cardinal Builders has a balance sheet that shows $300,000 in equity, $500,000 in bonds, and $200,000...
Cardinal Builders has a balance sheet that shows $300,000 in equity, $500,000 in bonds, and $200,000 in preferred stock. If this represents the firm's target capital structure, what is its desired debt percentage?
a. 80%
b. 20%
c. 30%
d. 70%
e. 50%
Homework Answers
e. 50%
| Total debt percentage | = | Total debt | / | (Equity+debts+preferred stock) | |||
| = | $ 5,00,000 | / | (300000+500000+200000) | ||||
| = | $ 5,00,000 | / | $ 10,00,000.00 | ||||
| = | 50% | ||||||
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