Question
AA Airlines has 100 000 shares of common stock outstanding The stock is currently selling for 50 a share The firm also has 2 bond
AA Airlines has 100 000 shares of common stock outstanding The stock is currently selling for 50 a share The firm also has 2 bond issues outstanding Each bond in all issues has a face value of 1 000 The first bond issue has a total face value of 500 000 and pays 8 percent interest annually This bond is selling at 82 0 percent of face value The second bond issue consists of 10 000 bonds which are selling for 1 100 each These bonds pay 12 percent interest annually and mature in 15 years The tax rate is 20 percent What is the capital structure weight of the firm s debt 69 53 30 47 79 11 33 33
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