A company is valued at $200 billion. If Debt funding constitutes 55% of the total, and Preferred Stocks make up 10%, how much funding is from Common Stocks?

Question

BlackTom AI · Accepted Answer

Total funding must sum to 100%, so Common Stocks = 100% − Debt% − Preferred% = 100% − 55% − 10% = 35%.

1. Relevant knowledge points and concepts
- Percentages of capital components add to 100% of a company's valuation.
- Converting a percentage to a monetary value: (percentage as decimal) × total valuation.

2. Step-by-step reasoning
- Given: Total company value = $200 billion; Debt = 55%; Preferred = 10%.
- Remaining percentage for Common Stocks = 100% − (55% + 10%).

3. Calculations with intermediate steps
- Sum of Debt and Preferred = 55% + 10% = 65%.
- Remaining percentage for Common = 100% − 65% = 35%.
- Convert 35% to decimal: 35% = 35/100 = 0.35.
- Monetary amount = 0.35 × $200 billion.
- Compute: 0.35 × 200 = (35/100) × 200 = (35 × 200) / 100 = 7000 / 100 = 70.
- Therefore Common Stocks funding = $70 billion.

4. Why the correct answer is correct
Because the proportions must add to 100%, subtracting the given Debt and Preferred percentages correctly yields 35% for Common. Applying that percentage to the $200 billion valuation gives $70 billion, matching the calculation above.

5. Why the other options are incorrect
- $110 billion would represent 55% of $200 billion, which duplicates the Debt portion and leaves no room for Preferred — inconsistent with the given 10% Preferred.
- $100 billion equals 50% of $200 billion, which combined with 55% Debt and 10% Preferred would exceed 100% (total 115%), impossible.
- $90 billion equals 45% of $200 billion; 45% + 55% + 10% = 110%, also exceeding 100%.

6. Conclusion
The correct amount of funding from Common Stocks is $70 billion, which matches the provided answer.

A company is valued at $200 billion. If Debt funding constitutes 55% of the total, and Preferred Stocks make up 10%, how much funding is from Common Stocks?Single choice

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