Question

Lew's has 500 bonds outstanding with a price quote of 98.6. There are also 12,000 shares of common stock selling for $47 a share and 5,000 shares of preferred stock at $70 a share. What is the weight of equity

Answer 1

Answer:

$963300

Explanation:

Number of bonds = 500

Quote price of bond = 98.6

number of common stock shares = 12000

price of common stock share = $47

Number of preferred stock shares = 5000

price of preferred stock shares = $70

Calculate the weight of Equity

market value of bonds = 500 * 98.6 = $49300

market value of common stock = 12000 * 47 = $564000

market value of preferred stock = 5000 * 70 = $350000

therefore the weight of equity of Lew's

= value of bonds + value of common stock + value of preferred stock

= 49300 + 564000 + 350000 = $963300