Problem:
Suppose that a company's equity is currently selling for $24.00 per share and that there are 4.80 million shares outstanding.
Required:
If the firm also has 38 thousand bonds outstanding, which are selling at 105.00 percent of par, what are the firm's current capital structure weights for equity and debt respectively?
- 65.36%, 34.64%
- 50%, 50%
- 74.27%, 25.73%
- 22.86%, 77.14%
Note: Please provide reasons to support your answer.