Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt–equity ratio of .73. The cost of equity is 11.5 percent and the pretax cost of debt is 6.6 percent. What is the capital structure weight of the firm's equity if the firm's tax rate is 39 percent?

0.5780

Explanation:

Calculation to determine the capital structure weight of the firm's equity

Using this formula

Weight of equity = 1 / (1 + D-E)

Let plug in the formula

Weight of equity = 1 / (1 + .73)

Weight of equity = 1 / 1.73

Weight of equity = 0.5780

Therefore the capital structure weight of the firm's equity is 0.5780

almost done 23 out of 25

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.