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Butoxors [25]
3 years ago
6

Landmoon Inc. has 10,800 shares of common stock outstanding at a price of $42 per share. It also has 245 shares of preferred sto

ck outstanding at a price of $93 per share. There are 580 bonds outstanding that have a coupon rate of 6.1 percent paid semiannually. The bonds mature in 23 years, have a face value of $1,000, and sell at 105 percent of par. What is the capital structure weight of the preferred stock?
Business
1 answer:
zhuklara [117]3 years ago
4 0

Answer:

 0.0210

Explanation:

The computation of the weight of the preferred stock is shown below:

Particulars Shares    Price Value ( Shares × Price)   Weight ( Value ÷Total value)

Equity 10,800   $42         $4,53,600                0.4179

Preferred Stock 245 $93         $22,785                        0.0210

Bonds 580           $1,050         $6,09,000                0.5611

Total value                                     $1,085,385

for computing the weight we simply divide the value of the preferred stock with the total value

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Answer:

NPV is positive,the project should be accepted

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In determining whether or not the project should be accepted ,we need to ascertain the Net Present value of the project which is present value of cash inflows of $13,000 for 35 years minus the initial investment of $125,374.60 committed today.

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Backed up with examples from the text
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igor_vitrenko [27]

Answer:

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