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8090 [49]
3 years ago
10

Avery Co. has $1.1 million of debt, $1 million of preferred stock, and $2.2 million of common equity. What would be its weight o

n debt
Business
1 answer:
Vladimir79 [104]3 years ago
7 0

Answer:

0.26

Explanation:

Given that :

Value of debt = $1.1 million

Value of preferred stock = $1 million

Value of common equity = $2.2 million

Total value of company's funds :

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

(1.1 + 1 + 2.2) million

= $4.3 million

Hence, weight of debt :

Value of debt / total value of company's funds

$1.1 million / $4.3 million

= 0.2558

= 0.26

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