Question
Dani Corporation has 8 million shares of common stock outstanding. The current share price is $80, and the book value per share is $8. The
Dani Corporation has 8 million shares of common stock outstanding. The current share price is $80, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $125 million, has a coupon rate of 5 percent, and sells for 91 percent of par. The second issue has a face value of $110 million, has a coupon rate of 4 percent, and sells for 106 percent of par. The first issue matures in 23 years, the second in 9 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?
a. Equity/Value | |
a. Debt/Value | |
b. Equity/Value | |
b. Debt/Value | |
c. More relevant |
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