Question
Erna Corp. has 4 million shares of common stock outstanding. The current share price is $83, and the book value per share is $8. Erna
Erna Corp. has 4 million shares of common stock outstanding. The current share price is $83, and the book value per share is $8. Erna Corp. also has two bond issues outstanding. The first bond issue has a face value of $90 million, has a coupon of 6 percent, and sells for 98 percent of par. The second issue has a face value of $60 million, has a coupon of 7 percent, and sells for 106 percent of par. The first issue matures in 21 years, the second in 3 years. |
A. What are Ernas capital structure weights on a book value basis?\ Equity/Value= Debt/Value= B. What are Ernas capital structure weights on a market value basis? Equity/Value= Debt/Value= | |
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