(Defining capital structure weights) In August of 2009 the capital structure of

Question

(Defining capital structure weights)In August of 2009 the capital structure of the Emerson Electric Corporation (EMR) (measured in book and market values) appeared as follows:

$39,184,000

The appropriate weight of debt, Wd, is _______%. (Round to one decimal place.)

The appropriate weight of common equity, Wcs, is _______%. (Round to one decimal place.)

(Thousand of dollars) Book Values Market Values Short-term debt $1,156,000 $1,156,000 Long-term debt $11,919,000 $11,919,000 Common equity $9,142,000 $26,109,000 Total capital $22,217,000

$39,184,000

Explanation / Answer

The appropriate weight of debt, Wd, is 33.4%

The appropriate weight of common equity ,Wcs, is 66.6%

Source of capital Market Values Market value weights Debt $ 13,075,000 33.4% Common equity $ 26,109,000 66.6% $ 39,184,000 100%

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