Question
Regions, Inc., has 6.1 million shares of common stock outstanding. The current share price is $61.10, and the book value per share is $4.1. Regions
Regions, Inc., has 6.1 million shares of common stock outstanding. The current share price is $61.10, and the book value per share is $4.1. Regions also has two bond issues outstanding. The first bond issue has a face value of $70.1 million, a 7.1 percent coupon, and sells for 97.5 percent of par. The second issue has a face value of $35.1 million, a 6.6 percent coupon, and sells for 96.5 percent of par. The first issue matures in 21 years, the second in 13 years. |
Required: | |
(a) | What are the companys capital structure weights on a book value basis? Market value weight of equity: 0.19210.21520.28230.78480.80790.8306Market valueBond value Market value weight of debt: 0.19210.21520.28230.78480.80790.8306Market valueBond value |
(b) | What are the companys capital structure weights on a market value basis? Market value weight of equity: 0.19210.21520.28230.78480.80790.8306Market valueBond value Market value weight of debt: 0.19210.21520.28230.78480.80790.8306Market valueBond value |
(c) | Which are more relevant, the book or market value weights? 0.19210.21520.28230.78480.80790.8306Market valueBond value |
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