1 / 24

Estimating Weights for the Capital Structure

Estimating Weights (Continued). Suppose the stock price is $50, there are 3 million shares of stock, the firm has $25 million of preferred stock, and $75 million of debt.. (More...). Vce = $50 (3 million) = $150 million.Vps = $25 million.Vd = $75 million.Total value = $150 $25 $75 = $250 mil

kylene
Download Presentation

Estimating Weights for the Capital Structure

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. Estimating Weights for the Capital Structure If you don�t know the targets, it is better to estimate the weights using current market values than current book values. If you don�t know the market value of debt, then it is usually reasonable to use the book values of debt, especially if the debt is short-term.

More Related