Question
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $76, and the book value per share is $7. The
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $76, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $105 million, a coupon rate of 5 percent, and sells for 95 percent of par. The second issue has a face value of $90 million, a coupon rate of 4 percent, and sells for 107 percent of par. The first issue matures in 25 years, the second in 8 years. Both bonds make semiannual coupon payments.
a. | What are the company's capital structure weights on a book value basis? |
b. | What are the companys capital structure weights on a market value basis? |
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