XYZ Co. has 9,000 bonds with a price of $925, 15,000 shares of preferred stock with...
XYZ Co. has 9,000 bonds with a price of $925, 15,000 shares of preferred stock with a price of $55, and 250,000 share of common stock with a selling price of $32. Calculate the capital structure weights.
Homework Answers
Total value of bonds=(9000*925)=$8,325,000
Total value of preferred stock=(15000*55)=$825,000
Total value of common stock=(250,000*32)=$8,000,000
Total value=$(8,325,000+825000+8,000,000)=$17,150,000
Hence weight of:
Bonds=(8,325,000/17,150,000)=0.4854(or 48.54% approx)
Preferred stock=(825000/17,150,000)=0.0481(or 4.81% approx)
Common stock=(8,000,000/17,150,000)=0.4665 (or 46.65% approx).
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