6. Vedder, Inc., has 7 million shares of common stock outstanding. The current share price is $62.00,
Question:
6.
Vedder, Inc., has 7 million shares of common stock outstanding. The current share price is $62.00, and the book value per share is $5.00. Vedder also has two bond issues outstanding. The first bond issue has a face value of $71 million, a coupon rate of7 percent, and sells for 93 percent of par. The second issue has a face value of $36 million, a coupon rate of 7.5 percent, and sells for 92 percent of par. The first issue matures in 20 years, the second in 12 years. |
Required: | |
(a) | What are the companys capital structure weights on a book value basis?(Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) |
Book value weight of equity | |
Book value weight of debt |
(b) | What are the companys capital structure weights on a market value basis?(Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) |
Market value weight of equity | |
Market value weight of debt |
(c) | Which are more relevant, the book or market value weights? |
Market value or Book value? (Click to select)Market valueBook value |