Dee's Dress Emporium has 50,000 shares of common stock outstanding at a price of $27 a share. It also has 1000 shares of preferred stock outstanding at a price of $20 a share. There are 800bonds outstanding that have a semiannual coupon payment of $25. The bonds mature in four years, have a face value of $1,000, and sell at 97 percent of par. What is the capital structure weight of the common stock

0.6290

Explanation:

Common Stock = Shares * Price per share

= 50,000 * $27

= $1,350,000

Preferred Stock = Shares * Price per share

= 1,000 * $20

= $20,000

Bonds = Bonds outstanding * Face value * sell at 97% par

= 800 * 1000 * 0.97

= 776,000

Total = Common Stock + Preferred Stock + Bonds

= $1,350,000 + $20,000 + 776,000

= 2,146,000

Capital structure weight of the common stock:

= Common Stock value : Total value

= $1,350,000 : 2,146,000

= 0.6290