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atroni [7]
3 years ago
7

Here I Sit Sofas has 7,100 shares of common stock outstanding at a price of $94 per share. There are 600 bonds that mature in 30

years with a coupon rate of 6.8 percent paid semiannually. The bonds have a par value of $2,000 each and sell at 108.5 percent of par. The company also has 6,000 shares of preferred stock outstanding at a price of $47 per share. What is the capital structure weight of the debt?
Business
1 answer:
Zinaida [17]3 years ago
6 0

Answer:

Weight of debt = 57.83 %

Explanation:

given data

number of shares =  7,100

price = $94 per share

number of bonds = 600

mature time = 30 year s

coupon rate = 6.8 percent

bonds par value = $2,000

sell = 108.5 percent

stock outstanding = 6,000 shares

stock outstanding price = $47 per share

to find out

capital structure weight of the debt

solution

first we get here Equity market value that is express as

Equity market value = number of shares × price per share

Equity market value = 7100 × $94

Equity market value = $667,400

and  

current debt value will be here as

current debt value = number of bonds × price per bond

current debt value = 600 × (1.085 × 2000)

current debt value = $1,302,000

and now Preferred stock value will be

Preferred stock value = stock outstanding × stock outstanding price

Preferred stock value = 6,000  × $47

Preferred stock value = $282000

and total capital will be as  

Total capital = Equity market value + current debt value + preferred stock value ..................1

put here value

Total capital =  $667,400 +  $1,302,000 + $282000

total capital = $2251400

so here Weight of debt will be

Weight of debt = debt value ÷ total capital ..............2

Weight of debt = \frac{1,302,000}{2251400}

Weight of debt = 0.578306

Weight of debt = 57.83 %

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8 0
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Assume an annual interest rate of 8%. You have $1. What is the value of the $1 one year in the future
seropon [69]

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3 0
2 years ago
Taylor & Edwards Inc. manufactures television sets. Last month, direct materials (electronic components, etc.) costing $550,
kirill [66]

Answer:

$170.24

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7 0
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During 2017, Ziplock Manufacturing expected Job No. 89 to cost $700,000 in overhead, $1,000,000 in direct materials, and $500,00
irga5000 [103]

Answer:

a. not able to be determined from the provided information.

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A tax preparer is part of
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C would be the answer
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Read 2 more answers
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