Book Value versus Market Value Filer Manufacturing has 9.5 million shares of common stock outstanding. The current share price is $53, and the book value per share is $5. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of

$75 million and an 8 percent coupon and sells for 93 percent of par. The second issue has a face value of $60 million and a 7.5 percent coupon and sells for 96.5 percent of par. The first issue matures in 10 years, the second in 6 years.

a. What are Filer’s capital structure weights on a book value basis?

b. What are Filer’s capital structure weights on a market value basis?

c. Which are more relevant, the book or market value weights? Why? LO.1