Question

Kim's Bridal Shoppe has 12,400 shares of common stock outstanding at a price of $58 per share. It also has 325 shares of preferred stock outstanding at a price of $88 per share. There are 400 bonds outstanding that have a coupon rate of 7.7 percent paid semiannually. The bonds mature in 39 years, have a face value of $2,000, and sell at 113 percent of par. What is the capital structure weight of the common stock

Answer 1

43.54%

Step-by-step explanation:

the firm's total market value:

• 12,400 common stocks x $58 = $719,200
• 325 preferred stocks x $88 = $28,600
• 400 bonds x $2,260 = $904,000
• total $1,651,800

total capital structure weight of common stocks = $719,200 / $1,651,800 = 43.54%