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?
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