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Dani Corporation has 8 million shares of common stock outstanding. The current share price is $80 and the book value per share is $7. The

Dani Corporation has 8 million shares of common stock outstanding. The current share price is $80 and the book value per share is $7. The company also has two bond issues outstanding, both with semiannual coupons. The first bond issue has a face value $75 million, a coupon of 9 percent, and sells for 95 percent of par. The second issue has a face value of $45 million, a coupon of 10 percent, and sells for 108 percent of par. The first issue matures in 24 years, the second in 7 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.)

c.

Which are more relevant?

multiple choice

  • Market value weights

  • Book value weights

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