Suppose That a Company's Equity Is Currently Selling for $45

Suppose that a company's equity is currently selling for $45 per share and that there are 1 million shares outstanding. If the firm also has 7 thousand bonds outstanding, which are selling at 97 percent of par ($1,000) , what are the firm's current capital structure weights for equity and debt respectively?

A) 50 percent, 50 percent
B) 86.89 percent, 13.11 percent
C) 12.50 percent, 87.50 percent
D) 31.69 percent, 68.31 percent

Correct Answer:

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