Capital structure weight of the firm debt


Problem:

Paul's Fish Market issues only common stock and coupon bonds. the firm has a debt-equity ratio of .48. The cost of equity is 9% and the pre-tax cost of debt is 7.5%. The tax rate is 34%.

Required:

Question: What is the capital structure weight of the firm's debt?

  • 21.40%
  • 28.09%
  • 32.43%
  • 37.14%
  • 48.00%

Note: Provide thorough explanation of the given question.

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Accounting Basics: Capital structure weight of the firm debt
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