Suppose a flood changes the production capacity in a country. How would you represent this situation with a production possibili
1 answer:
You might be interested in
Answer:
Weight of Debt that is = 24.40 %
Weight of Equity = 71.52 %
Weight of Preferred Stock = 4.07 %
Explanation:
given data
market value Debt = $102 million
book value = $95 million
preferred stock = $ 17 million
common equity = $49 per share
shares outstanding = 6.1 million
to find out
What weights should MV Corporation use
solution
we get here first Market Value of Equity that is express as
Market Value of Equity = share Outstanding × common equity ...............1
put here value
Market Value of Equity = 6.1 million × 49
Market Value of Equity = $298.9 million
and now we get here Total Market Value that is
Total Market Value = Market Value + Market Value of Equity + Preferred Stock ...........2
put here value we get
Total Market Value = $102 million + $298.9 million + $17 million
Total Market Value = $417.9 million
so now we get
Weight of Debt that is =
Weight of Debt that is =
Weight of Debt that is = 0.2440 = 24.40 %
and
Weight of Equity =
Weight of Equity =
Weight of Equity = 0.7152 = 71.52 %
so
Weight of Preferred Stock =
Weight of Preferred Stock =
Weight of Preferred Stock = 0.04067 = 4.07 %