Question
Dinklage Corp. has 10.1 million shares of common stock outstanding. The current share price is $46, and the book value per share is $4. The
Dinklage Corp. has 10.1 million shares of common stock outstanding. The current share price is $46, and the book value per share is $4. The company also has two bond issues outstanding. The first bond issue has a face value of $78 million, has a 9 percent coupon, and sells for 91 percent of par. The second issue has a face value of $63.63 million, has a 9 percent coupon, and sells for 93.5 percent of par. The first issue matures in 11 years, the second in 6 years.
a. What is the company'scapital structure weight of equity on a book value basis?
b. What is the company's capital structure weight of debt on a book value basis?
c. What is the company's capital structure weight of equity on a market value basis?
d. What is the company's capital structure weight of debt on a market value basis?
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