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.