What is the relashionship between reserve ratio and interest rate spread
1 answer:
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Answer:
weight of equity = 75.86 %
so correct option is B) 75.86%
Explanation:
given data
common stock outstanding = 5.8 million
preferred stock outstanding = 1.8 million
bonds = 28.00 thousand
preferred shares selling = $14.30 per share
bonds selling = 97.92 %
to find out
weight used for equity
solution
we get here Value of common shares that is express as
Value of common shares = 5.8 ×28.8
Value of common shares = $167.04 million
and
now we get Value of preferred stock will be
Value of preferred stock = 1.8 × 14.30
Value of preferred stock = $25.74 million
and
here Value of debt will be
Value of debt = 28000 × (1000 × 97.92%)
Value of debt = $27.4176 million
so total value we be
total value = $167.04 million + $25.74 million + $27.4176 million
Total value = $220.1976 million
so weight of equity is here as
weight of equity =
weight of equity = 75.86 %
so correct option is B) 75.86%