Suppose That Papa Bell Inc

Suppose that Papa Bell Inc.'s equity is currently selling for $30 per share, with 4 million shares outstanding. If the firm also has 70 thousand bonds outstanding, which are selling at 95 percent of par ($1,000) , what are the firm's current capital structure weights?

A) Weight of Equity = 74.11 percent; Weight of Debt = 25.89 percent
B) Weight of Equity = 64.34 percent; Weight of Debt = 35.66 percent
C) Weight of Equity = 67.80 percent; Weight of Debt = 32.20 percent
D) Weight of Equity = 65.19 percent; Weight of Debt = 34.81 percent

Correct Answer:

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