Camps Products, Inc. has 20,000 shares of common stock outstanding with the curr

Question

Camps Products, Inc. has 20,000 shares of common stock outstanding with the current price per share of $11 per share. It also has 6,000 shares of preferred stock outstanding at a price of $34.00 per share. There are 350 bonds outstanding that have a 7.5% semiannual coupon that will mature in 6 years, have a face value of $1000, and currently quoted at 101 percent of par. What is the capital structure weight of debt?

I know the answer is 45.47%, but I am not sure how they got to the answer. Could someone show me the steps to get to that point?

Explanation / Answer

Common stock-20,000*11=220,000 Preferred Stock-6,000*34=204,000 Debt-350*1010=353,500 you get the 1010 by multiplying the $1000 by 1.01 Add those together and you get 777,500 Divide 353,500 by 777,500 and you get .45466 or 45.47% hope this helps

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