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Problem 14-12 Book Value versus Market Value (LO3] Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $73, and
Problem 14-12 Book Value versus Market Value (LO3] Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $73, 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 $90 million, a coupon rate of 6 percent, and sells for 98 percent of par. The second issue has a face value of $75 million, a coupon rate of 5 percent, and sells for 110 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 weights 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 weights on a market value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) a. EquityValue Debt/Value b. Equity/Value Debt/Value c. Which are more relevant, the book or market value weights
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