Question
7. Vedder, Inc., has 7.5 million shares of common stock outstanding. The current share price is $62.50, and the book value per share is $5.50.
| 7. Vedder, Inc., has 7.5 million shares of common stock outstanding. The current share price is $62.50, and the book value per share is $5.50. Vedder also has two bond issues outstanding. The first bond issue has a face value of $71.5 million, a coupon rate of 7 percent, and sells for 90.5 percent of par. The second issue has a face value of $36.5 million, a coupon rate of 8 percent, and sells for 89.5 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_______________ |
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