Question

The Wall Company has 131,000 shares of common stock outstanding that are currently selling at $29.69....

The Wall Company has 131,000 shares of common stock outstanding that are currently selling at $29.69. It has 4,310 bonds outstanding that won't mature for 20 years. They were issued at a par value of $1,000 paying a coupon rate of 6%. Comparable bonds now yield 9%. Wall's $100 par value preferred stock was issued at 8% and is now yielding 12%; 7,500 shares are outstanding. Assume that the coupon payments are semi-annual. Develop Wall's market value based capital structure. Round the values to the nearest dollar and the weights to two decimal places of percentage. Do not round your intermediate calculations. Round PVF and PVFA values in intermediate calculations to four decimal places.

The percent for total captial also

Component Value Capital Structure
Debt $   %
Preferred stock %
Equity %
Total Capital $  
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Answer #1

Answer :

Interest on bond per year = 1000 * 6% = $60 , semi-annual = $30

Value per bond = ( Interest )PVFA(k,n) + ( FV ) PVF (k,n)

= $30 PVFA( 4.5% , 40 ) + 1000 PVF(4.5% , 40 )

= $30 * 18.4017 + 1000 * 0.1719

= $552.05 + 171.90

= $723.95

Value per preferred stock =Interest / Current yield

= (100 * 8%) / 12% = $66.67

Value per common stock = $29.69

Particulars Price Quantity Value Capital structure %
Debt $723.95 4,310 $ 3,120,225 41.55%
Preferred stock $66.67 7,500 $ 500,025 6.66%
Equity $29.69 131,000 $ 3,889,390 51.80%
$ 7,509,640
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