Calculate the capital structure weights

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Use the following information and calculate the capital structure weights.

Debt information: 1,900 bonds outstanding. Its bonds have a 7 percent coupon, paid semi-annually, with 8 years to maturity, and are currently selling at $980. Par value is $1,000.

Equity information: 40,000 shares outstanding. The firm is a constant dividend growth firm which is expected to pay a dividend of $1.08 a share, sells for $20 per share, and has a dividend growth rate of 3 percent.

a.wd = 30%, we = 70%

b.wd = 70%, we = 30%

c.wd = 40%, we = 60%

d.wd = 60%, we = 40%

Reference no: EM132703607

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