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NeTakaya
3 years ago
6

Raymond Co. has $1.1 million of debt, $2 million of preferred stock, and $2.1 million of common equity. What would be its weight

on preferred stock?
Business
1 answer:
Yuliya22 [10]3 years ago
6 0

Answer:

0.3846

Explanation:

Given that :

Amount of debt = $1.1 million

Amount of preferred stock = $2 million

Amount of common equity = $2.1 million

Total value of company's finance funds :

(Amount of debt + Amount of Preffered stock + Amount of common equity)

(1.1 million + 2 million + 2.1 million)

= $5.2 million

Hence, weight on preferred stock:

Amount of preferred stock / total value of company's finance

$2 million / $5.2million

= 0.3846

Hence, weight of Preffered stock = 0.3846

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