Question
Bonaime, Inc., has 6.5 million shares of common stock outstanding. The current share price is $61.50, and the book value per share is $4.50. The
Bonaime, Inc., has 6.5 million shares of common stock outstanding. The current share price is $61.50, and the book value per share is $4.50. The company also has two bond issues outstanding. The first bond issue has a face value of $70.5 million, a coupon rate of 7 percent, and sells for 95.5 percent of par. The second issue has a face value of $35.5 million, a coupon rate of 7 percent, and sells for 94.5 percent of par. The first issue matures in 20 years, the second in 12 years.
a. What are the companys capital structure weights on a book value basis?
Book value weight of equity ?
Book value weight of debt ?
What are the companys capital structure weights on a market value basis?
Market value weight of equity ?
Market value weight of debt ?
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