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Darryl's Doughnuts currently has 1,532,948 shares of stock outstanding that sell for 5.14. Additionally,Darryl has issued...

Darryl's Doughnuts currently has 1,532,948 shares of stock outstanding that sell for 5.14. Additionally,Darryl has issued 17,652 bonds, with a par value of $1,000. They currently sell for 98.6% of par.

What is Darryl's debt weight?

(Enter your answer as a percentage to 1 decimal place. ex: 12.3)

Solutions

Expert Solution

Darryl’s Debt weight = 68.84%

Weight of debt = (Total Debt ÷ Total capital) * 100

Total share value = No. of shares outstanding * market price

                                    = 1,532,948 * 5.14

                                    = 7,879,352.72

Total Debt = Number of Bonds issued * Bond market price

                        =17,652 * 986

                        = 17,404,872

Bond market price = Par Value of the bond * current selling % of Par Value

                                    = 1000 * 98.6%

                                    =986

Total Capital = Total Share Value + Total Debt)

                        =7,879,352.72 + 17,404,872

                        =25,284,224.72

Weight of Debt = (Total Debt ÷ Total Capital) * 100

                        = (17,404,872 ÷ 25,284,224.72) *100

                        = 0.688369

=68.84%

jeff jeffy answered 5 months ago
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