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yle Co. has $1.1 million of debt, $3 million of preferred stock, and $1.2 million of common equity. What would be its weight on common equity

User Leigh S
by
7.9k points

1 Answer

7 votes

Answer:

0.22

Step-by-step explanation:

Calculation for the weight on common equity

Using this formula

Weight of Common equity = Common Equity/(Debt + Preferred Equity+Common Equity)

Where,

Common Equity=1.2

Debt =1.1

Preferred Equity=3

Let plug in the formula

Weight of common equity = 1.2/(1.1+ 3+ 1.2)

Weight of common equity=1.2/5.3

Weight of Common Equity=0.22

Therefore the weight on common equity will be 0.22

User Guy Bouallet
by
8.2k points
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