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Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $10. The
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $10. The company also has two bond issues outstanding. The first bond issue has a face value of $120 million, a coupon rate of 4 percent, and sells for 92 percent of par. The second Issue has a face value of $105 million, a coupon rate of 3 percent, and sells for 104 percent of par. The first Issue matures in 22 years, the second in 7 years. Both bonds make semiannual coupon payments. a. What are the company's capital structure welghts 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 welghts on a market value basis? (Do not round Intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) a. Equity/Value Debt/Value b. Equity/Value Debt/Value c. Which are more relevant, the book or market value weights? Market value Book value
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