Question
Dani Corporation has 5.5 million shares of common stock outstanding. The current share price is $83, and the book value per share is $5. The
Dani Corporation has 5.5 million shares of common stock outstanding. The current share price is $83, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $80 million, has a coupon rate of 5.5 percent, and sells for 109 percent of par. The second issue has a face value of $45 million, has a coupon rate of 5.8 percent, and sells for 108 percent of par. The first issue matures in 21 years, the second in six years.
- What are the companys capital structure weights on a book value basis?
Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.
- What are the companys capital structure weights on a market value basis?
Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.
- Which are more relevant, the book or market value weights?
a. Weight of equity
a. Weight of debt
b. Weight of equity
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