Question
Dani Corporation has 6 million shares of common stock outstanding. The current share price is $72, and the book value per share is $9. The
Dani Corporation has 6 million shares of common stock outstanding. The current share price is $72, and the book value per share is $9. The company also has two bond issues outstanding. The first bond issue has a face value of $85 million, has a coupon rate of 5 percent, and sells for 97 percent of par. The second issue has a face value of $70 million, has a coupon rate of 4 percent, and sells for 109 percent of par. The first issue matures in 21 years, the second in 8 years. Both bonds make semiannual coupon payments. What are the company's 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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