Question
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $81, and the book value per share is $8. The
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $81, and the book value per share is $8. The company also has two bond issues outstanding. The first bond issue has a face value of $80 million, a coupon of10 percent, and sells for 96 percent of par. The second issue has a face value of $50 million, a coupon of11 percent, and sells for 104 percent of par. The first issue matures in 25 years, the second in 8 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/ValueDebt/Value
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., 32.1616.)
Equity/ValueDebt/Value
c.Which are more relevant, the book or market value weights?
Not sure what formulas to use to get the right answer
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