Problem:
Claus Enterprises has 174,000 shares of common stock outstanding at a current price of $46 a share. The firm also has two bond issues outstanding. The first bond issue has a total face value of $250,000, pays 7.7 percent interest annually, and currently sells for 102.5 percent of face value. The second bond issue consists of 5,000 bonds that are selling for $993 each. These bonds pay 6.5 percent interest annually and mature in 8 years. The tax rate is 34 percent.
Required:
Question: What is the capital structure weight of the firm's common stock?
- 47.78 percent
- 51.39 percent
- 55.50 percent
- 60.52 percent
- 71.86 percent
Note: Please show guided help with steps and answer.