Question
drinklage corp. has 7 million shares of common stock outstanding. The current share price is $83, and the book value per share is $8. The
drinklage corp. has 7 million shares of common stock outstanding. The current share price is $83, 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 $140 million, a coupon rate of 6 percent, and sells for 94 percent of par. The second issue has a face value of $125 million, a coupon rate of 5 percent, and sells for 105 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?
Equity/value
Debt/Value
b.What are the company's capital structure weights on a market value basis?
equity/value
Debt/Value
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