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Avery Co. has $1.4 million of debt, $1.5 million of preferred stock, and $1.2 million of common equity. What would be its weight on debt?

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ogorwyne

Answer:

0.34

Explanation:

Debt = 1.4 million dollars

Preferred stock = 1.5 million

Common equity = 1.2 million

We are to calculate the Weight on debt

The total value of funds=

Debt + preferred stock + common equity

= (1.4 + 1.5 + 1.2) million

= $4.1 million

So Weight on debt

Debt/total value of funds

= 1.4milloin / 4.1 million

= 0.3415

= 0.34

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