Question
Dinklage Corp. has 10.1 million shares of common stock outstanding. The current share price is $58, and the book value per share is $5. The
Dinklage Corp. has 10.1 million shares of common stock outstanding. The current share price is $58, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $80 million, has a 7 percent coupon, and sells for 91 percent of par. The second issue has a face value of $64.64 million, has a 7 percent coupon, and sells for 94.1 percent of par. The first issue matures in 10 years, the second in 7 years.
a. What is the company's capital 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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