Ask Question
29 June, 04:47

Further From Center has 11,100 shares of common stock outstanding at a price of $45 per share. It also has 260 shares of preferred stock outstanding at a price of $87 per share. There are 610 bonds outstanding that have a coupon rate of 6.4 percent paid semiannually. The bonds mature in 26 years, have a face value of $1,000, and sell at 106.5 percent of par. What is the capital structure weight of the preferred stock?

+3
Answers (1)
  1. 29 June, 05:09
    0
    The capital structure weight of the preferred stock is 0.019

    Explanation:

    In order to calculate the capital structure weight of the preferred stock we would have to calculate first the total value of all the particulars as follows:

    Total value particulars=value common stockv+value preferred stock+value bonds outstanding

    value common stock=11,100*$45=$499,500

    value preferred stock=260*$87=$22,620

    value bonds outstanding=610 * ($1,000*106.5%) = $649,650

    Total value particulars=$499,500+$22,620+$649,650

    Total value particulars=$1,171,770

    Therefore, the capital structure weight of the preferred stock=value preferred stock/Total value particulars

    capital structure weight of the preferred stock=$22,620/$1,171,770

    capital structure weight of the preferred stock=0.019

    The capital structure weight of the preferred stock is 0.019
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Further From Center has 11,100 shares of common stock outstanding at a price of $45 per share. It also has 260 shares of preferred stock ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers