Further From Center has 11,800 shares of common stock outstanding at a price of $52 per share. It also has 295 shares of preferred stock outstanding at a price of $94 per share. There are 340 bonds outstanding that have a coupon rate of 7.1 percent paid semiannually. The bonds mature in 33 years, have a face value of $2,000, and sell at 110 percent of par. What is the capital structure weight of the preferred stock?

The correct answer is 0.02.

Explanation:

According to the scenario, computation of the given data are as follows:

Common stock shares = 11,800 shares

Common stock share price = $52 per share

So, total value of common stock = 11,800 × $52 = $613,600

Preferred stock shares = 295 shares

Preferred stock share price = $94 per share

So, total value of Preferred stock = 295 × $94 = $27,730

Bonds outstanding = 340

Bond price = $$2,000 and Sell at 110% of par.

So, total value of outstanding bond = 340 (2,000 × 110%) = $748,000

So, Capital structure weight of Preferred stock = total value of Preferred stock ÷ Total value of all stock.

= $27,730 ÷ ( $613,600 + $27,300 + $748,000)

= $27,730 ÷ $1,388,900

= 0.019 or 0.02

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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