Homework Answers
Assuming face value to be $1000
Market value of debt = Number of bonds * (face value * quoted percentage)
Market value of debt = 1,000,000 * (1000 * 1.15)
Market value of debt = 1,150,000,000
Market value of preferred stock = 1,800,000 * 95 = 171,000,000
Market value of common stock = 80,000,000 * 30 = 2,400,000,000
Total market value = 1,150,000,000 + 171,000,000 + 2,400,000,000 = 3,721,000,000
Weight of debt = ( Market value of debt / total value) * 100
Weight of debt = (1,150,000,000 / 3,721,000,000) * 100
Weight of debt = 30.9%
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