Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ten Pins Manufacturing has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7.

image text in transcribed

Ten Pins Manufacturing has 5 million shares of common stock outstanding. The current share price is $84, and the book value per share is $7. The company also has two bond issues outstanding. The first bond issue has a face value of $60 million and a coupon rate of 7 percent and sells for 94 percent of par. The second issue has a face value of $35 million and a coupon rate of 8 percent and sells for 107 percent of par. The first issue matures in 22 years, the second in 4 years. 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., 32.1616.) Equity/Value Debt/Value 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., 32.1616.) Equity/Value Debt/Value c. Which are more relevant, the book or market value weights? O Market value Book value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Course On Financial Mathematics

Authors: M V Tretyakov

1st Edition

1908977388, 978-1908977380

More Books

Students also viewed these Finance questions

Question

How can the Internet be helpful in a job search? (Objective 2)

Answered: 1 week ago