Question: T.J. Enterprises is trying to determine the weights to be used in estimating their cost of capital. The firms current balance sheet and market information

T.J. Enterprises is trying to determine the weights to be used in estimating their cost of capital. The firmâ€™s current balance sheet and market information regarding the price and number of securities outstanding are listed below.

Calculate the firmâ€™s capital component weights using book values as well as marketvalues.

TJ Enterprises Balance Sheet (in thousands) S50,000 S60,000 S0 S48,000 $15,000 Current Assets Current Liabilities Long-Term Assets Long-Term Liabilities Bonds Payable Owner's Equity Preferred Stock Common Stock S47,000 Total Assets $110,000 Total L & OE $110,000 Market Information Debt 48.000 $850 Preferred Stock Common Stock 1,300,000 Outstanding Market Price 102,000 S95.40 S40

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Based on book values Weight of Debt 48000110000 4364 Weight of PS 1500011... View full answer

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