Problem:
Suppose that a company's equity is currently selling for $30 per share and that there are 5 million shares outstanding. If the firm also has 20 thousand bonds outstanding, which are selling at 98 percent of par ($1,000),
Required:
Question: What are the firm's current capital structure weights for equity and debt respectively?
a. 50%, 50%
b. 88.44%, 11.56%
c. 99.60%, 0.40%
d. 88.23%, 11.77%
Note: Please show how to work it out.