Yesterday, Inc. has 1000 bonds outstanding at a price of $975 per share. The company only uses equity and debt to fund its capital. The total value of entire company is $1,665.900 What is the capital structure weight of equity for Yesterday, Inc.? Mumiple Cinoice 0.585 0331 0.869 0.415
To calculate the capital structure weight of equity, we need to know the value of equity and the total value of the company.
The value of equity can be calculated by subtracting the value of debt from the total value of the company.
Value of equity = Total value of the company - Value of debt
Given that the total value of the company is $1,665,900 and the price per share of bonds is $975, we can calculate the value of debt as:
Value of debt = Number of bonds outstanding * Price per share
Value of debt = 1000 * $975 = $975,000
Now we can calculate the value of equity:
Value of equity = $1,665,900 - $975,000 = $690,900
Next, we need to calculate the capital structure weight of equity, which is the proportion of equity to the total value of the company.
Capital structure weight of equity = Value of equity / Total value of the company
Capital structure weight of equity = $690,900 / $1,665,900 ≈ 0.4146
Therefore, the capital structure weight of equity for Yesterday, Inc. is approximately 0.415.
To calculate the capital structure weight of equity for Yesterday, Inc., we need to use the formula:
Capital Structure Weight of Equity = Equity Value / Total Value of the Company
Given that the total value of the entire company is $1,665,900, we need to determine the equity value.
Equity Value = Total Value of the Company - Debt Value
To find the debt value, we need to multiply the number of bonds outstanding by the price per bond:
Debt Value = Number of Bonds Outstanding * Price per Bond
Debt Value = 1000 * $975 = $975,000
Now we can calculate the equity value:
Equity Value = $1,665,900 - $975,000 = $690,900
Lastly, we can determine the capital structure weight of equity:
Capital Structure Weight of Equity = $690,900 / $1,665,900
After calculating the division, the capital structure weight of equity for Yesterday, Inc. is approximately 0.415.