Question
Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $65, and the book value per share is $4. The
Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $65, 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 $50 million, a coupon rate of5 percent, and sells for 90 percent of par. The second issue has a face value of $35 million, a coupon rate of4 percent, and sells for 102 percent of par. The first issue matures in 20 years, the second in 5 years. Both bonds make semiannual coupon payments.
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., .1616.)
b.What are the company's capital structure weights on a market value basis?(Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)
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