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Dani Corporation has 4 million shares of common stock outstanding. The current share price is $83 and the book value per share is $8. The

Dani Corporation has 4 million shares of common stock outstanding. The current share price is $83 and the book value per share is $8. The company also has two bond issues outstanding, both with semiannual coupons. The first bond issue has a face value $90 million, a coupon of 6 percent, and sells for 98 percent of par. The second issue has a face value of $60 million, a coupon of 7 percent, and sells for 106 percent of par. The first issue matures in 21 years, the second in 3 years.

a.

What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)

b. What are the company's capital structure weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)

Equity/Value=

Debt/Value=

Equity/Value=

Debt/Value=

c.

Which are more relevant?

multiple choice

  • Market value weights

  • Book value weights

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