Khd has 1,500 bonds outstanding that are selling for $1,000 each. the common stock is priced at $26 a share and there are 36,000 shares outstanding. what is the weight of the common stock as it relates to the firm's weighted average cost of capital?

38.42%

Explanation:

First, find the market value of debt( bonds in this case);

market value of debt = price of bond * number of bonds

 = $1,000 * 1,500 = $1,500,000

First, find the market value of common stock;

market value of common stock = price per share * number of stock outstanding

 = $26 * 36,000 = $936,000

Since debt and equity make up KHD company's capital ,

total capital = market value of debt + market value of common stock

= $1,500,000 + $936,000

= $2,436,000

Weight of the common stock = market value of common stock / total capital value;

= $936,000/ $2,436,000

= 0.3842 or 38.42% as a percentage

Therefore, What is the weight of the common stock is 38.42%

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.