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10. Samanta Company has 20 million equity shares outstanding. The book value per share is 40 and the market price per share is 120. Samanta
10. Samanta Company has 20 million equity shares outstanding. The book value per share is 40 and the market price per share is 120. Samanta has two debenture issues outstanding. The first issue has a face value of 300 million, 12 percent coupon, and sells for 90 percent of its face value. It will mature in 5 years. The second issue has a face value of 200 million, 14 percent coupon, and sells for 102 percent of its face value. It will mature in 6 years. Samanta also has a bank loan of 200 million on which the interest rate is 15 percent. What are Samanta's capital structure weights on a book value basis and on a market value basis? b. Which weights would you use? Why? a
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