Question 14 Suppose you are given the following information for the Legends of Clash Co. Debt:...

Question 14

Suppose you are given the following information for the Legends of Clash Co.

Debt: 18,000 bonds outstanding, with a face value of $1,000. The bonds currently trade at 112.5% of par value, and have 15 years to maturity. The coupon rate equals 4%, and the bonds make semi-annual coupon payments.

Common stock: 925,000 shares of common stock outstanding; currently trading for $56 per share. Beta equals 1.45.

Preferred stock: 150,000 shares of preferred stock outstanding; currently trading for $97.5 per share; pays a $8.25 dividend every year.

Market: The expected return on the market equals 10%, and the risk free rate is 1%.

Tax rate: 30%

Calculate the weight of the common stock in the capital structure. (Enter percentages as decimals and round to 4 decimal places)

Solutions

Expert Solution

Answer = 59.76%

jeff jeffy answered 11 months ago

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