13.) what is the weight in debt for the firm ?

A CFO is trying to determine her firm's capital structure. The firm has the following simplified balance sheet: Balance Sheet: Long-term debt: $5,999,031,00 Sharaholder Equity: $5,927,728.00 An analyst has estimated that the debt trades at 99.00% of book value, while the market to book ratio for the common stock is 1,14 , What is the weight in debt for the firm? Answer format: Parcentage Round to: 2 decimal places (Example: 9.24%,% sign required. Will accept decimal format rounded to 4 decimal places (ex 0.0924) A CFO is trying to determine her firm's capital structure. The firm has the following simplified balance sheet: An analyst has estimated that the debt trades at 88% of book value, whlle the market to book ratio for the common stock is 1.25 . What is the weight in debt for the firm? SOLUTION: In finance, we always focus on how the market values the firm, not what our balance sheet indicates. So we will calculate the market values with this example. D=Marketvalueofdebt=PriceaspercentofParTotalParValueD=Marketvalueofdebt=88%$5miltion=$4.40million MarkettoBookratio=BookvalueofequityMarketvalueofequity=$5millionMarketvalueofequity=1.25E=Marketvalueofequity=1.25$5miltion=$6.25miltionFirmvalue=V=D+E=$4.40+$6.25=$10.65million%ofDebt=D+ED=VD=$10.65$4.40=0.4131=41.31%