Question

raymond co. has $1.4 million of debt, $2.5 million of preferred stock, and $1.8 million of common equity. what would be its weight on common equity?

Answer 1

To calculate the weight on common equity, divide the common equity by the total capital structure of the company and multiply by 100%.

Step-by-step explanation:

Weight on common equity can be calculated by dividing the common equity by the total capital structure of the company.

In this case, the common equity is $1.8 million and the total capital structure is $1.4 million of debt + $2.5 million of preferred stock + $1.8 million of common equity = $5.7 million.

To calculate the weight on common equity:

Weight on common equity = (Common equity / Total capital structure) x 100%

Weight on common equity = ($1.8 million / $5.7 million) x 100%

Weight on common equity = 31.58%