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9.6 Rooster, Inc., has 10 million shares of common stock outstanding. The current share price is S50, and the book value per share is S6.
9.6 Rooster, Inc., has 10 million shares of common stock outstanding. The current share price is S50, and the book value per share is S6. Rooster also has two bond issues outstanding that both originally sold at par. The first bond issue has a face value of $80 million, has an 8 percent coupon, and sells for 104 percent of par. The second issue has a face value of S50 million, has a 7.5 percent coupon, and sells for 102 percent of par. The first issue matures in 10 years, the second in 6 years. a. (4 points) What are Rooster's capital structure weights on a book value basis? What are Rooster's capital structure weights on a market value basis? c. (2 points) Which are more relevant, the book or market value weights? Why
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