Ask Question
BusinessBusiness
22 October, 12:16

KHD has 1,500 bonds outstanding that are selling for $1,000 each. The common stock is priced at $26 a share and there are 36,000 shares outstanding. What is the weight of the common stock as it relates to the firm's weighted average cost of capital?

+5
Answers (1)
  1. 22 October, 15:35
    0
    38.42%

    Explanation:

    First, find the market value of debt (bonds in this case);

    market value of debt = price of bond * number of bonds

    = $1,000 * 1,500 = $1,500,000

    First, find the market value of common stock;

    market value of common stock = price per share * number of stock outstanding

    = $26 * 36,000 = $936,000

    Since debt and equity make up KHD company's capital,

    total capital = market value of debt + market value of common stock

    = $1,500,000 + $936,000

    = $2,436,000

    Weight of the common stock = market value of common stock / total capital value;

    = $936,000 / $2,436,000

    = 0.3842 or 38.42% as a percentage

    Therefore, What is the weight of the common stock is 38.42%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “KHD has 1,500 bonds outstanding that are selling for $1,000 each. The common stock is priced at $26 a share and there are 36,000 shares ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
The spot price of silver is $25 per ounce. The storage costs are $0.24 per ounce per year payable quarterly in advance. Assuming that interest rates are 5% per annum for all maturities, calculate the futures price of silver for delivery in 9 months.
Answers (1)
On January 1, 2019 Miller Corporation had retained earnings of $8,000,000. During 2019, Miller reported net income of $1,500,000, declared dividends of $500,000, and had revenues of for $10,000,000.
Answers (1)
An interviewer can form a strong opinion of you within the first 30 seconds of meeting you.
Answers (1)
Which option would you select to control being linked to other people's posts? Timeline and tagging settings Location settings Security settings Privacy and tools
Answers (1)
Using the adage you get what you measure when designing the performance evaluation system
Answers (1)
New Questions in Business
Monmouth Inc.'s stock has a 30% chance of producing a 20% return, a 30% chance of producing a 10% return, and a 40% chance of producing a - 10% return. What is the firm's expected rate of return?
Answers (2)
Oahu Industries' average total assets for the year are $4,000,000, its average total stockholders' equity for the year are $3,000,000, its net income is $800,000, its gross margin is $2,000,000, and its net sales are $10,000,000.
Answers (1)
Following the completion of the bank reconciliation, an adjusting entry was made that debited cash and credited Interest Revenue. Therefore the bank reconciliation must have included an item that was: A.
Answers (2)
Which of the following is least likely to be a factor in developing a sales forecast? a. Number of salespeople employed by the firm's major competitors b. Geographic area in which the product is sold c. Entire product line d.
Answers (1)
Should you use a personal website, such as a blog, for research? Question 20 options: True False
Answers (1)
Home » Business » KHD has 1,500 bonds outstanding that are selling for $1,000 each. The common stock is priced at $26 a share and there are 36,000 shares outstanding. What is the weight of the common stock as it relates to the firm's weighted average cost of capital?
Sign Up Forgot Password?