Question
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $5. The
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70, 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 $60 million, a coupon of5 percent, and sells for 95 percent of par. The second issue has a face value of $40 million, a coupon of6 percent, and sells for 104 percent of par. The first issue matures in 20 years, the second in 4 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., 32.1616.) |
Equity/Value | |
Debt/Value |
b. | What are the companys capital structure weights on a market value basis?(Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) |
Equity/Value | |
Debt/Value |
c. | Which are more relevant, the book or market value weights? | ||
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started