Question
Masterson, Inc., has 9 million shares of common stock outstanding. The current share price is $69, and the book value per share is $8. The
Masterson, Inc., has 9 million shares of common stock outstanding. The current share price is $69, 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 $70 million, has a coupon rate of 6 percent, and sells for 94 percent of par. The second issue has a face value of $55 million, has a coupon rate of 5 percent, and sells for 106 percent of par. The first issue matures in 24 years, the second in 9 years. Both bonds make semiannual coupon payments.
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