Question
Dani Corporation has 6 million shares of common stock outstanding. The current share price is $78, and the book value per share is $9. The
Dani Corporation has 6 million shares of common stock outstanding. The current share price is $78, 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 $115 million, has a coupon rate of 7 percent, and sells for 93 percent of par. The second issue has a face value of $100 million, has a coupon rate of 6 percent, and sells for 105 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?
What are the companys capital structure weights on a market value basis?
Which are more relevant, the book or market value weights?
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