Question: P13-1 Capital Structure Weights A. Suppose that Chi Chili's equity is currently selling for $40 per share, with 2.5 million shares outstanding. If the firm

P13-1 Capital Structure Weights

A.Suppose that Chi Chili's equity is currently selling for $40 per share, with 2.5 million shares outstanding. If the firm also has 100,000 bonds outstanding, which are selling at 94 percent of par, what are the firm's current capital structure weights?

Suppose that Chi Chili's is considering an active change to their capital structure so as to have a D/E of 0.60 OR 60%, which type of security (stocks or bonds) would they need to sell to accomplish this, and how much would they have to sell?

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