Question
Bea Kerr is an analyst in the treasurer's office at MupetLabs Inc. Mr. Kerr needs your help to estimate the market value weights for MupetLabs'
Bea Kerr is an analyst in the treasurer's office at MupetLabs Inc. Mr. Kerr needs your help to estimate the market value weights for MupetLabs' cost of capital. MupetLabs has long-term bonds outstanding, preferred shares outstanding, and common shares. Selected information for each of the securities is provided in the table below.
Long-term Debt | Preferred Shares | Common Shares |
$10 million face value | 1.4 million shares outstanding | 5.2 million shares outstanding |
Coupon rate = 6% | Face value = $8 per share | Market price of share = $26 |
Annual coupons | Dividend rate (annual) = 9% | |
Time to maturity = 8 years | Equivalent preferred shares yield 11% | |
YTM = 9% |
What is the market value of long-term debt? million
b.What is the market value of preferred shares? million
c.What are the capital structure weights for MupetLabs Inc.?
Debt = %
Preferred = %
Equity = %
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