The bonds have 25 years to maturity and sell for 890.78., Ask an Expert

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Greenfield Industries has 6 million shares of common stock outstanding, 750,000 shares of preferred stock outstanding, and 300,000 issues of corporate bond outstanding. The bonds have face value $1,000 and coupon rate 8.8%. The common stock sells for $50 per share and has a beta of 1.25. Greenfield's next dividend is expected to be $2.50 per share, and the dividend is expected to grow at 8% indefinitely. The preferred stock sells for $70 per share and pays $6 annual dividend. The bonds have 25 years to maturity and sell for $890.78. The market risk premium is 8%, T-bills are yielding 5%, and Greenfield's tax rate is 25%. Answer the following problems.

What is the firm's market value capital structure?

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