Watson's Automotive has a $400,000 bond issue outstanding that is selling at 102 % of face value. Watson's also has 4,500 shares of preferred stock and 21,000 shares of common stock outstanding. The preferred stock has a market price of $44 a share compared to a price of $21 a share for the common stock. What is the weight of the debt as it relates to the firm's weighted average cost of capital?

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The Answer of Watson's Automotive has a $400,000 bond issue outstanding that is selling at 102 % of face value. Watson's also has 4,500 shares of preferred stock and 21,000 shares of common stock outstanding. The preferred stock has a market price of $44 a share compared to a price of $21 a share for the common stock. What is the weight of the debt as it relates to the firm's weighted average cost of capital?

Watson's Automotive Has a $400,000 Bond Issue Outstanding That Is