Proportion of the firm capital structure

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Quokka Enterprises has 6 million ordinary shares outstanding that are currently priced at $5.00 each and have a beta of 0.9. The company has 500,000 preference shares trading at $5 each. Eight years ago the company issued bonds with a total face value of $8 million. One bond has a face value of $200,000. The bonds have a coupon rate of 3% p.a. and coupons are paid semi-annually. The bonds mature in seven years from today. The bonds currently yield 4% p.a., the return on the stock market is 9% p.a., the risk-free return is 3% p.a., and the company tax rate is 30%.

What proportion of the firm's capital structure is debt?

Reference no: EM132686853

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