Suppose That a Company's Equity Is Currently Selling for $55

Suppose that a company's equity is currently selling for $55 per share and that there are 1 million shares outstanding. If the firm also has 50 thousand bonds outstanding, which are selling at 95 percent of par ($1,000) , what are the firm's current capital structure weights for equity and debt respectively?

A) 50%, 50%
B) 53.66%, 46.34%
C) 52.38%, 47.62%
D) 36.67%, 63.33%

Correct Answer:

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